Next year’s climate summit still lacks a host
washingtonpost.com, 7th of December 2023
News publ. 27. Apr 2016
What opportunities do small and medium-sized companies in Asia have for investing in green technologies? And how up to the task are the banks? Five brief studies by adelphi show: Green financing suffers from both a lack of offers from creditors and demand from firms. But there are rays of hope.
Increasing the resource efficiency and sustainability of small and medium-sized enterprises (SMEs) is the goal of many strategies, projects, and funding programmes. To make this a success, SMEs need specially tailored financing programmes via which they can invest in green technologies. The result of multiple new country studies performed by adelphi for the SWITCH-Asia Network Facility is that the availability of green financial products is often complicated by the same problems facing regular SME financing.
In a total of five brief studies, adelphi investigated the financing landscape for SMEs in Cambodia, China, India, Myanmar, and Vietnam. Comprehensive desk research and interviews have shown: the development of finance offers for investing in climate and resource-friendly technologies vary greatly from country to country. The challenges and structural problems facing businesses and banks, however, manifest themselves very similarly in all the study countries.
All five countries have great difficulties generating any demand for green investments among domestic businesses. Small businesses in particular often lack the necessary accounting documents and information to at all qualify as borrowers. Beyond that, they are often not in a position to raise the collateral necessary to receive a loan. In many cases, they also often lack the knowledge to judge which green investments would actually make sense for them.
Creditors also demonstrate a variety of deficits. Many credit institutions often lack the technical know-how to decide if a loan for a supposedly green technology makes sense in terms of environmental benefits. The banks are also frequently reluctant to take a risk on providing financing for a technology that may not have fully proven itself yet.
In addition to the difficulties mentioned above, the country studies also show ways and means that could be taken up and copied by decision-makers in politics and business. Successful examples such as the model of the energy service companies (ESCOs) in China, green lines of credit and policy programmes in Vietnam, or the broad micro-credit landscape in Cambodia show how access to green financial products can be improved in those countries, and how demand for green financial products among SMEs can be stimulated.
With the SWITCH-Asia Programme, the European Commission is advocating support for Asia’s economic development and poverty reduction in the region. For this purpose, the environmental impacts of industry and consumers should be reduced and sustainable growth promoted.