This is the untapped engine for climate action — and here are 4 ways governments can help
Pamela Jouven, Director, SME Climate Hub
From Brazil to Bangladesh, small- and medium-sized enterprises (SMEs) are the engine of the global economy. Yet they are currently being held back from playing their crucial role in the net-zero transition.
Representing 90% of global businesses and contributing over 50% of the world’s GDP, SMEs are foundational to achieving global climate goals and securing the resilience of international supply chains. However, compared to larger, well-resourced corporates, SMEs face significant barriers — and one of the most significant is a persistent lack of supportive government policy.
To meet global climate goals, governments at every level can step up to clearly communicate to SMEs that sustainable business is good business, and show them the way forward.
Zooming in: The policy gap is holding back progress
The transition to a net-zero economy cannot succeed if SMEs are left behind. These businesses support the livelihoods of 2 billion people annually and are vital to thriving communities. Yet a recent SME Climate Hub survey revealed a startling fact: 80% of respondents reported either low government support or a lack of awareness of available incentives.
Current policy landscapes worldwide are clearly failing to equip SMEs for success. By supporting and incentivizing the climate action of SMEs, governments have the power to turn climate risk into business and economic innovation and opportunity.
The four pillars of policy action
This is why today, the SME Climate Hub, alongside a global community of organizations representing over six million SMEs, launched an Open Letter to the Heads of Delegations at the UN Climate Change Conference (COP30) in Belém, Brazil. The message to governments is clear: The economy will benefit from the implementation of policies and targeted incentives that empower small businesses to act.
The open letter is a practical roadmap, urging world leaders to adopt a coordinated, four-pillar policy framework to streamline guidance, mobilize green finance and officially recognize SMEs in policy frameworks as the critical climate actors they are.
The SME Climate Hub and its partners urge governments to prioritize the following:
- Ensure policy frameworks enable SME engagement: This means officially recognizing SMEs as a distinct and vital group in climate policy, incorporating them into countries’ national climate plans (NDCs) and National Adaptation Plans (NAPs) and ensuring they have fair access to green public procurement and inclusive value chains.
- Contribute to and promote the business case for SME climate action: To encourage and catalyze SME engagement, making net zero investment a viable business strategy, governments must actively support research into the economic benefits of decarbonization — such as cost savings and new market opportunities — and run consistent public awareness campaigns to clearly communicate that sustainable business is good business.
- Promote a streamlined pathway and centralized guidance: SMEs often struggle to find climate action guidance and information relevant to them. Providing clear, streamlined guidance will help SMEs to more easily take action to identify and address climate-related risk. Governments can help here by directing SMEs to a single platform of high-quality, standardized and practical tools and resources.
- Mobilize accessible green finance for SMEs: Small businesses need tailored financial support. This includes incentivizing financial institutions to offer accessible products, developing standardized eligibility frameworks and providing direct government support through grants, tax incentives and concessional loans.
What happens next?
The organizations behind this letter are calling on governments to rise to this challenge. By adopting these four key policy priorities, they can remove the top barriers to SME climate action. In so doing, they will support SMEs to drive the global net-zero transition forward at speed and scale, building resilient, thriving economies and communities.
Read the full Open Letter to COP30 Delegations.
If you are an SME, use this toolkit to tell governments exactly what you need to accelerate your climate action.