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Think Small to Fight Climate Change

Small businesses are integral to climate-change mitigation and adaptation, particularly in the developing world. But international policymakers and financial institutions routinely overlook their contribution, jeopardizing us all.

SAN FRANCISCO/WASHINGTON, DC – When applied to droughts, wildfires, hurricanes, floods, or other extreme weather events, the term “unprecedented” is getting old. In August, when the Intergovernmental Panel on Climate Change released its latest report about the dire realities we face, a drought exacerbated by global warming already had been raging for years across much of southern Africa.

It seems as though world leaders are finally ready to take meaningful action, but there’s a critical group regularly missing from key climate meetings like the recent United Nations Climate Change Conference (COP26) in Glasgow: local, climate-focused small businesses that already are making a difference in their communities. Small and medium-size enterprises (SMEs) working on climate adaptation and mitigation are a crucial but underestimated partner in the fight to reduce emissions.

Even though climate financing options are increasing, SMEs’ role in sustainable development continues to be overlooked. Their predicament is one shared by more than 200 million SMEs of all types in developing countries that cannot get the funds they need to grow, facing an estimated $5.2 trillion annual financing gap. International investors focus on getting dollars out the door through larger deals, while local capital is kept on the sidelines by high collateral requirements and unmanageable interest rates for early-stage businesses.

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