Data-driven financial models for sustainable SME growth: Integrating green finance into small and medium enterprise strategies

Abstract

In recent years, the increasing urgency to address climate change and environmental degradation has prompted a shift towards sustainable business practices, particularly within the realm of small and medium enterprises (SMEs). This paper explores the integration of green finance into the strategic frameworks of SMEs, examining how financial instruments and funding mechanisms can support environmentally sustainable practices while fostering economic growth. By assessing the current landscape of green finance, including green loans, bonds, and impact investing, the study identifies barriers SMEs face in accessing these resources. It highlights successful case studies where SMEs have effectively utilized green finance to implement energy-efficient technologies, sustainable supply chains, and eco-friendly product innovations. Furthermore, the paper proposes a strategic model for SMEs to incorporate green finance into their operations, emphasizing the importance of aligning with sustainability goals, enhancing stakeholder engagement, and leveraging partnerships with financial institutions. The findings underscore that integrating green finance not only contributes to environmental sustainability but also enhances the competitive advantage and resilience of SMEs in an evolving market landscape.