Exploring global practices in providing small and medium enterprises access to sustainable finance solutions

Abstract

This study investigates the role of sustainable finance in enhancing the growth and sustainability of Small and Medium Enterprises (SMEs), focusing on the integration of environmental, social, and governance (ESG) principles. The main objectives were to map the current landscape of sustainable finance for SMEs, identify barriers to access, evaluate the impact of sustainable finance on SME growth, explore the role of digitalization, and provide policy recommendations. Through a mixed-methods approach combining literature review, case studies, and empirical analysis, the study offers a comprehensive overview of the global practices in sustainable finance for SMEs. Key findings reveal that while there is a growing availability of sustainable financial instruments, SMEs face significant challenges in accessing these resources due to a lack of awareness, stringent eligibility criteria, and complex application processes. The study also highlights the positive impact of sustainable finance on SME growth and sustainability, with digitalization playing a crucial role in enhancing access to finance. However, the effectiveness of these financial instruments and digital platforms varies significantly across different regions and sectors. Based on the findings, the study recommends that policymakers and financial institutions implement more inclusive policies and develop financial products that cater to the unique needs of SMEs. It also calls for increased efforts in capacity building to raise awareness among SMEs about the benefits of sustainable finance. Future research should focus on the long-term effects of sustainable finance on SME competitiveness and resilience, and the potential of public-private partnerships in facilitating access to sustainable finance.