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How well are we doing?

Small business support



How well are we doing?

Editor's note: We will soon be updating our policy comparisons and case studies to include our 12 newest countries: Germany, Serbia, South Korea, USA, Ethiopia, Australia, Spain, Italy, Nigeria, Turkey, Indonesia, Japan.

Small businesses are the engine-room of the world. In emerging economies, small and medium enterprises (SMEs) on average provide 60% of the jobs and 40% of GDP – even more when informal markets are accounted for – while in the European Union, SMEs account for 99% of all firms. Small business support is therefore vital to the green economy, ensuring that companies of all sizes can go green.

National policies supporting green small businesses vary hugely across the 20 countries examined, with both model policies and a complete lack of policy support on show. This divergence doesn’t necessarily correlate with broader government preferences for public sector or private enterprise solutions. Instead, strong support for green small businesses cuts across conventional north/south, private/state development models, with some unexpected results.

Despite strong attention to greening and private sector investment, respectively, in their green economy approaches Costa Rica and the United Arab Emirates have amongst the support for small business in their transition policies. Similarly, Sweden’s consistent strength across many areas of green economy policy is not felt on small and social business. By contrast, the United Kingdom has developed innovative business models for supporting social enterprise, while Malaysia, Peru and especially France are the outstanding performers with clear policies and direct support mechanisms for socially conscious green business.

As SMEs employ up to 60% of the global workforce, their full involvement in the transition to an inclusive green economy is essential to achieving the SDGs.

Li Yong
Director General, UN Industrial Development Organization; speaking at HLPF 2019

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About this policy

Small start-ups are agile, innovative, and entrepreneurial – exactly what is needed to develop the technologies and business practices of tomorrow. But smaller firms often operate on tight margins and have limited capacity; new environmental regulations can feel especially onerous. Greening the small business economy means both empowering leaders to innovate, while also providing support for traditional SMEs to go green.

Social enterprises have an increasingly important role to play, especially those that have a mission to deliver social, environmental and financial rewards – the “triple bottom-line” approach. Creating the right legal frameworks, fiscal incentives and regulatory support for small or social-purpose business is the real challenge for governments.

The weakest policies for green businesses provide no support at all for SMEs, whether they are trying to be green or not. Basic approaches indicate general support for small business and additional help to go green, perhaps through limited regulatory exemptions or training. Better policies have strong legal definitions for social enterprise and support for triple bottom-line businesses, and the most ambitious include financial support for green business models and sustainable practices.

Policy methodology

Case Study: Malaysia

Social enterprise is a concept that has gained real attention in Malaysia, and is central to an entrepreneur-led approach to economic development. The Malaysian Social Enterprise Blueprint 2015-18 – published by the Malaysian Global Innovation and Creativity Centre (MaGIC) – sets out the plan for a comprehensive social enterprise ecosystem, including a legal definition and enabling environment. The Malaysian approach emphasises the social and environmental benefits of mission-driven enterprise as an engine for eco-innovation.

Malaysia Country Profile

Case Study: France

In many ways the originator of a ‘social and solidarity economy’ model, combining business innovation with social consciousness, France has a broad definition of social enterprise and a variety of support programmes for small business innovation. Direct support for SME greening includes training and financing for participation in the ecological transition.

France Country Profile