Policy approaches to support green financing of micro, small, and medium-sized enterprises Asia-Pacific financial inclusion forum

Micro, small, and medium-sized enterprises (MSMEs) significantly drive economic growth in developing economies, contributing to job creation and development of innovative products and services. Yet, the barriers are high to MSME access to financing opportunities, including their limited credit history and a lack of collateral (Cheok and Singh 2018). Businesses generally are facing surging financing needs as they navigate net-zero pathways and climate-resilient business models. This poses growing challenges to MSMEs in particular, which are largely constrained in their access to green finance. Financial access and inclusion for MSMEs in green finance are therefore a critical issue for the Asia-Pacific Financial Inclusion Forum (APFIF) to address. The APFIF facilitates identification and development of concrete actions for policymakers and regulators to extend the reach and value of financial services to everyone, including those most in need.

The forum was established as a policy initiative on the recommendation of the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council by the APEC Finance Ministers in 2010. Led by the Asian Development Bank (ADB), it aims to deliver the objectives of the Finance Ministers’ Process related to financial inclusion. To better understand challenges and opportunities for the green financing of MSMEs, ADB, in partnership with the Asian Development Bank Institute (ADBI) and with support from the Griffith Asia Institute, organized the 13th and 14th annual APFIF Policy Dialogues in Tokyo on 21–22 June 2023 and in Cusco on 30 May 2024. The meetings brought together senior government officials, policy experts,
and industry leaders from multiple economies in Asia and the Pacific and Latin America.

Under the theme “Policy Approaches to Support Green Financing of Micro, Small, and Medium-Sized
Enterprises,” the roundtable policy dialogues focused on identifying effective policy approaches to:

i. promote greater awareness and development of green finance products tailored to MSMEs,
ii. overcome the practical challenges MSMEs face in accessing green finance,
iii. address food insecurity by developing green finance opportunities for small-holder farmers,
iv. expand green finance opportunities and effectiveness for MSMEs through innovative technology solutions.

Given the emergent nature of these issues and limited past work on them (Cheok and Singh 2018; OECD 2022; IGFWG 2022) the ADB teams designed a survey exploring the nexus between green finance and MSMEs. The survey was targeted at officials and roundtable participants from APEC economies between May and July 2023 and covered 16 questions in five broad themes.

source:

https://www.adb.org/publications/policy-approaches-green-financing-msmes