Green technology and eco-efficient firms as an opportunity to promote financial de-risking

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Small and Medium-sized Enterprises (SMEs), including micro-enterprises, are core engines of innovation, growth, job creation and social cohesion in high-income and emerging economies, as well as low-income developing countries.

G20 countries need to recognize and engage SMEs, and especially low-carbon technology SMEs, as key economic actors in the effort toward climate mitigation and sustainable development. Failing to bring them on board, or designing strategies that do not take into account the challenges and barriers they face, significantly reduces the chances of successfully attaining UN Sustainable Development Goals and the commitments made at the Paris Agreement.

These are the results of a paper recently published on Economics (among the authors, CMCC researcher Elena Verdolini). As highlighted in the study, this should be achieved by creating signals for private investors through: (1) a reporting system that can help monitor the scale-up of green-technology SMEs; (2) the use of public funds to signal innovative green-technology SMEs to investors; and (3) the inclusion of SMEs in the design of green finance platforms. By implementing these recommendations, the G20 will ensure that innovative, low-carbon SMEs become attractive, low(er)-risk investment opportunities for the private sector.

Read and download the full paper.

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