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SMEs and entrepreneurship

OECD Platform on Financing SMEs for Sustainability

 

What is the issue? 

The ambitious climate-related targets set out in the Paris Agreement cannot be achieved without the green transition of small and medium-sized enterprises (SMEs). SMEs are critical actors in global climate efforts, not only as drivers of technological change, but also as adopters of green business models and practices to reduce their environmental footprint. However, ensuring small businesses can finance their green transition will require the engagement across a range of actors in the financial ecosystem, including public and private financial institutions, regulators, rating providers and others.

Public and private financial institutions have a critical role to play in financing this transition and providing non-financial support in terms of awareness raising and practical tools to help guide SMEs on the journey to net zero.  In doing so, they can help boost SMEs’ demand for green financing and investment.

 However, public and private financial institutions alike, face considerable challenges in accompanying their SME clients in the green transition. Obtaining accurate and comparable data on SMEs’ ESG performance is challenging in light of limited reporting requirements as well as SMEs’ capacity constraints.  The lack of common and aligned methodologies and frameworks for ESG integration in investment strategies and risk management adds another layer of complexity. Banks and other financial institutions also face challenges associated with regulatory uncertainty. Finally, supply of sustainable finance and development of financing instruments are also strongly driven by demand signals – and SME demand, even if rising, is still relatively limited.

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How can the Financing SMEs for Sustainability Platform address these challenges? 

 

The OECD Platform on Financing SMES for Sustainability, launched on 2 November 2021 on the margins of the COP26, provides a forum to advance knowledge sharing, data and analytical work, and policy dialogue on sustainable finance for SMEs. By bringing together public and private financial institutions, governments, Fintech companies, regulators and SME representatives, the Platform aims to bridge existing knowledge and awareness gaps and develop and share innovative, workable solutions and good practices for finance providers, SMEs and governments. This work aims to accelerate SMEs’ and financial institutions’ green transition.

Financial institutions stand to reap important benefits from enhanced policy dialogue with public financial institutions, governments and regulators. Furthermore, peer-to-peer learning can help them implement effective solutions to boost SME awareness and demand for sustainable finance products.

Three pillars underpin the development of the initiative: data collection and analytical research, knowledge sharing and exchanges, and networking and policy dialogue:

 

1/ Knowledge sharing and exchange

  • The Platform showcases good practices that financial institutions and governments have implemented to boost the provision of sustainable finance for SMEs, including both demand- and supply-side interventions.
  • It will also explore approaches to financing different types of SMEs to support the range of green actions they take (e.g. biodiversity, circular economy).
  • Pilots could serve to operationalise relevant models by additional countries and institutions.
  • Participants will work together to develop a set of mutually agreed objectives and principles to guide the various actors in financing SMEs for sustainability.

 

2/ Analytical research and data improvements

  • The OECD Secretariat and Platform participants will develop and share new and ongoing research on financing SMEs for sustainability, focusing on the specific challenges these firms face. Work will leverage data from across the OECD (e.g. SME financing Scoreboard indicators, firm-level data, sectoral data, environmental and finance data), as well as data collected by Platform participants (available survey data, bank data e.g. on the provision of green loans or climate related credit), and additional government data).
  • Research will also seek to assess different programmes, schemes, and financial products, and identify good practices.
  • The Platform will feed into an OECD report on “Financing SMEs for sustainability” and the development of a repository of good policy practices for knowledge sharing.

 

3/ Networking and policy dialogue

  • Through Platform member meetings, Steering Committee meetings at CEO/senior level and an annual conference, the Platform will convene and engage different stakeholders and experts on SME sustainable finance to inform the design and implementation of policies and frameworks aimed at fostering SMEs’ green transition. It will contribute to environmental global processes and initiatives, such as the COP.
  • The Platform will engage financial institutions of diverse sizes, types, and geographies, to represent the highly diverse finance market for SMEs, in line with the G20/OECD High-Level Principles on SME Financing.
  • Different formats will be adopted to facilitate exchange and peer-to-peer learning among participants. In particular, roundtables, webinars, presentation of research findings and discussion of case studies, and policy experiences to analyse and showcase successful practices implemented by governments and financial institutions.
  • The Platform will collect regular feedback and experiences from partners on the latest developments on sustainable and green financing for SMEs.

Events

 

Research

Blogs

Contact

To learn more contact Miriam.Koreen@oecd.org or Marija.Kuzmanovic@oecd.org


with the support of:

 

This is the logo of the partners of the Financing for Sustainability program of the OECD.

 

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