Addressing the climate crisis requires the net zero transition of millions of SMEs
globally. SMEs have a significant aggregate environmental footprint and need to adopt
cleaner business models. As eco-entrepreneurs and eco-innovators, they also have a
key role to play in devising innovative climate solutions. Access to finance is essential
for SME investments in net zero, but small businesses face considerable challenges
in tapping into the growing pool of sustainable finance. This challenge is likely
to grow as financial institutions seek to comply with mandatory environmental reporting
requirements. This policy paper examines the sustainable finance landscape for SMEs,
the various actors in the ecosystem and the key drivers and barriers affecting the
supply of and demand for sustainable finance. It provides an overview of the key policies
and instruments in place to support SME access to sustainable finance and identifies
considerations for future public support and policy making.