Scaling Up Public Financial and Non‑Financial Support for SME Sustainability

5. Lessons learned and good practices in the provision of financial and non-financial support to SMEs

Abstract

This chapter synthesises key observations, trends, and common features across green financial instruments and support programmes for SME innovators, enablers, and adopters. It highlights lessons learned from the design and implementation of these initiatives and identifies success factors that contribute to their effectiveness. By drawing on evidence from diverse programmes, the chapter provides insights to guide the development of targeted support mechanisms that enhance SMEs’ ability to advance the green transition.

Building on the mapping of relevant financing and non-financial support instruments, a wide range of examples from across OECD and non-OECD economies, and a series of in-depth case studies, the previous three chapters showcase how public support can help SME innovators, enablers and adopters in boosting their contribution to the green transition. This chapter summarises key observations, trends and common features across these instruments and support programmes. It further provides insights on lessons learned and success factors identified in the analysed case studies (see Table 5.1 and Annex A).

It is important to note that the majority of programmes under study are novel and have not yet been subject to a formal evaluation. Insights and lessons learned are, therefore, based on available quantitative and qualitative information. Other elements, such as default rates for most of the guarantee and direct lending programmes, are not available.

Table 5.1. Overview of case studies

Geographical Scope	Provider	Programme	Financing instrument / Non-financial support
Instruments for SME innovators
Canada	Business Development Bank of Canada (BDC)	The Climate Tech Fund II	Equity and quasi equity financing
Finland	Business Finland	Flexible Energy Systems (FES)	R&D Grants
India	SBI Ventures	Neev II Fund	Equity financing
Malaysia	SME Bank Malaysia and Central Bank of Malaysia	High Tech & Green Facility (HTG)	Concessional loans
Asia	Asian Development Bank (ADB) Ventures	ADB Ventures	Equity and quasi-equity financing
Instruments for SME enablers
Denmark	Export and Investment Fund of Denmark (EIFO)	Green Accelerator	Supply chain financing
Moldova	Organization for Entrepreneurship Development (ODA)	Credit Guarantee for Renewable Energy Producers	Guarantee
Africa and Asia	Netherlands Enterprise Agency (RVO)	Energy Enterprise Coach	Business development services
Southern Africa	International Climate Initiative, REEEP	SOARING (Southern African Renewable Energy Investment and Growth) Programme	Market access programme
Instruments for SME adopters
Australia	Sustainability Victoria	Environmental Upgrade Finance	Property-linked loans
Czech Republic	National Development Bank of the Czech Republic (NRB)	Energ programme	Green loans
Denmark	Danish Business Authority (DBA)	Automated Sustainability Reporting	Sustainability reporting support
Japan	Shoko Chukin Bank	Decarbonisation Management Consulting Services	Technical assistance programme
Korea	Industrial Bank of Korea (IBK)	ESG Successful Management Loan	Sustainability linked loans
Malaysia	Capital Markets Malaysia (CMM)	Simplified ESG Disclosure Guide (SEDG)	Sustainability reporting support
Mexico	Nacional Financiera (NAFIN)	Eco Sustainable Credit Programme	Green loans
Singapore	DBS Bank	ESG Ready Programme	Support programme and sustainable financing
Slovenia	Slovenian Enterprise Fund (SEF)	Life Cycle Assessment (LCA) Voucher	Grant
Norway, Sweden, Denmark, Finland	European Investment Bank (EIB) and DNB Bank ASA	EIB’s Green Synthetic Securitisation financing initiative in the Nordics	Green synthetic securitisation
EU27, Iceland and Norway	EU (InvestEU programme) and the European Investment Fund (EIF)	InvestEU Sustainability Guarantee and green equity support instruments	Green guarantees
International	European Bank for Reconstruction and Development (EBRD)	Supply Chain Solutions Framework	Green trade finance

5.1. Key trends and features in financial support for SME greening

Policymakers and other public actors have a broad spectrum of instruments at their disposal to support SME sustainability. These range from grants and risk financing for innovators, to sector-specific and revenue-based financing for enablers, and green loans, guarantees, and performance-based financing for adopters. While the structure of these instruments varies, they all aim to expand SME access to sustainable finance while balancing financial risk and viability.

Financing products are becoming increasingly diverse

The study examines a wide range of financing instruments. Many are traditional financing instruments, such as loans, guarantees, and equity funds, that are being redesigned or repurposed to support sustainability objectives. These represent the majority of instruments currently in use. However, there are also many newer instruments being put in place - such as sustainability-linked loans, revenue-based financing, and performance-based contracts – that are designed to specially address sustainability-related constraints as well as objectives. These are typically less widespread, and many are still at an exploratory stage.

There is a growing interest from policymakers in aligning SME financing with sustainability goals and expanding the range of instruments available to support the green transition. While traditional mechanisms such as loan guarantees and concessional financing remain central to SME support, there is increasing recognition that more tailored and flexible instruments may be needed to encourage SMEs to invest in sustainability. As a result, many public financial institutions are experimenting with new financial models. Interviews conducted for this study confirm this trend, with policymakers and financial institutions actively considering additional instruments to further support SME greening, including new risk-sharing mechanisms and sustainability-linked financing solutions.

This growing emphasis on SME financing for sustainability serves a dual purpose: addressing SMEs' access to finance while simultaneously advancing environmental and climate objectives. Many SMEs, particularly smaller and younger firms and innovative firms with a risky business model, struggle to secure affordable financing. Policymakers therefore recognise that green finance initiatives must remain both accessible and practical for businesses across different sectors. At the same time, financial support is clearly tied to sustainability improvements, ensuring that public funds contribute to broader environmental goals. This balance is evident in the design of recent instruments, where public financial institutions are integrating risk-sharing mechanisms, sustainability performance criteria, and technical assistance.

Many programmes are implemented through financial intermediaries

Banks, venture capital funds, and other financial institutions are indispensable partners in most public instruments and play a crucial role in mobilising capital, assessing risk, and scaling up sustainable finance.

Risk-sharing and capital relief measures are often key to increasing financial intermediary engagement. Public-backed guarantees, blended finance structures, and synthetic securitisation (as seen in the EIB Group-DNB model in the Nordics) help de-risk SME lending and free up capital for additional investments. Similarly, the EU’s InvestEU Sustainability Guarantee reduces financing costs for financial intermediaries by covering up to 70% of potential losses on SME green loans, making these investments more attractive.

Public participation in programmes, especially those investing in new and emerging sectors and technologies, play a crucial demonstration role. The Neev II Fund, for instance, helps de-risk nascent climate sectors such as green hydrogen, through taking on early-stage equity stakes and facilitating follow-on investments. As such, the fund sends strong market signals, with its de-risking mechanisms attracting additional capital from commercial banks and institutional investors.

Programmes seek to incentivise the market and develop the financing ecosystem

Defining what qualifies as a sustainable investment for SMEs is complex, and existing reporting frameworks often create additional burdens, compounding the general financial constraints SMEs already face. To address these challenges, targeted incentives for both debt and equity are being deployed to jumpstart the market and build a self-reinforcing cycle of SME participation in sustainable finance. For example, Canada’s BDC Climate Tech Fund II and the EU’s InvestEU Programme both aim to position SME sustainable finance as a credible, profitable asset class capable of attracting private co-investment.

Over time, these interventions are intended to be phased out, allowing sustainable SME finance to become mainstream and self-sustaining. The long-term goal is to foster market conditions where private financial institutions independently recognise the value of green investments and incorporate them into standard risk assessment and lending practices. By proving the viability and profitability of sustainable SME finance, these programmes aim to catalyse enduring private sector engagement. Furthermore, some policymakers interviewed reported early signs that such support is already influencing the wider ecosystem.

Sustainable finance instruments typically offer more favourable financing conditions

Programmes typically offer concessional terms to SMEs to encourage investment, decrease the risk and lower financial barriers for sustainable investments. This can come in the form of interest rates, as is for example the case of the High Tech & Green Facility in Malaysia, which are substantially below market interest rates. Similarly, the ENERG Programme of the National Development Bank of the Czech Republic provides interest-free loans to SMEs to support energy-efficiency investments.

Favourable financing conditions can also come in the form of longer tenure and reduced collateral requirements as is the case, for instance, of the Eco Sustainable Credit Programme in Mexico. Providing loans which cover full project costs alongside long tenures can also act as an important incentive, especially for green investments with high capital costs, as in the case of the Environmental Upgrade Finance scheme in Australia, which addresses financial barriers of building retrofitting. Additionally risk-sharing arrangements, such as the green synthetic securitisation operation between the EIB and DNB, enable banks to offer below-market interest rates to SMEs, with the EIB partially reimbursing guarantee fees, thereby passing financial benefits directly to SMEs.

Financial institutions are also increasingly designing programmes which reward improvements in SMEs’ sustainability performance with more favourable financing conditions. The ESG Successful Management Loan from the Industrial Bank of Korea for example, ties interest rates directly to ESG performance, incentivising SMEs to continuously advance on their sustainability journey.

Financial and non-financial support mechanisms are often used in tandem

Experience from various programmes suggests that financial support alone is often insufficient to drive meaningful adoption of green practices. SMEs lack the technical expertise, strategic capacity or awareness needed to identify the most effective sustainability investments or to meet evolving regulatory and market requirements. As a result, many programmes complement financial support with non-financial support mechanisms. For instance, under the NEEV programme, complementary non-financial support is provided to help companies address weaknesses identified during due diligence, thereby strengthening both their operational and impact performance. The Industrial Bank of Korea’s ESG Management Loan combines financial incentives (i.e. interest rate reductions) with ESG consulting services, ensuring that SMEs receive both funding and guidance on improving their sustainability performance.

5.2. Key lessons learned and factors for success

Across the case studies, several success factors can be identified.

Addressing identified market gaps or externalities

Successful programmes have a clear purpose: tackle a specific binding constraint that keeps viable green SME investments from happening. Such constraints include high perceived risk (due to thin collateral, unfamiliarity with new technology, for instance), long payback periods, high transaction costs and information asymmetry problems. In Moldova, for instance, the market failure arose from the observation that certified RES producers, especially start-ups, were credit-constrained by high collateral requirements with existing guarantees not very well suited to make sustainable investments. As a response, the Credit Guarantee for Renewable Energy Producers was introduced. This is a 70% portfolio guarantee with certification as the sole entry requirement, raising caps and removing financial eligibility hurdles. In Malaysia, Capital Markets Malaysia’s Simplified ESG Disclosure Guide (SEDG) tackles sustainability reporting constraints by replacing fragmented, variable data requests with standardised, modular templates.

Information and awareness gaps, alongside financial barriers, continue to act as key constraints to SME greening, and programmes are increasingly designed to address them. For example, the Slovenian Enterprise Fund helps SMEs overcome limited knowledge and expertise on conducting sustainability assessments by providing grants for conducting Life Cycle Assessments (LCAs). This reduces the financial burden of such assessments and enables SMEs to identify environmental impacts and improve resource efficiency. Non-financial support programmes also play a key role in addressing knowledge and capacity gaps. In Southern Africa, the SOARING programme addresses limited expertise on sustainability among local financial institutions through technical assistance and capacity-building, improving understanding of clean energy business models and technologies and thereby lowering the perceived risk of financing such projects. In a similar fashion, the Shoko Chukin Bank furthers SMEs’ understanding of decarbonisation by offering introductory courses on measuring GHG emissions and developing and implementing emissions reduction strategies.

Unlocking private investments

Programme design should enable the mobilisation of private capital rather than its replacement. Effective schemes do this by:

• Designing an appropriate risk sharing model. Banks, equity investors and other financiers can often be encouraged to finance sustainable projects in SMEs if the public sector derisks these investments, for example by first-loss or capped portfolio guarantees, subordinated tranches in blended structures, sustainability-linked pricing or performance premia, and so on. Canada’s Climate Tech Fund is a public VC fund that co-invests alongside private investors, typically sharing risk on equal terms and insisting on private participation. Fund I (the predecessor of the more recent Fund 2) estimates show that each public dollar unlocked mobilises around CAD 12 of private capital. Similarly, ADB Ventures uses co-funding to attract private capital into underfunded sectors, including clean technology and agriculture technology.

• Lowering transaction costs. Streamlining processes such as eligibility checks, due diligence, and reporting can significantly reduce administrative burdens for financing providers and act as a strong incentive for private sector participation. Denmark’s Automated Sustainability Reporting (DBA) pilot standardises digital data formats and creates a common exchange layer, so firms and lenders do not have to re-enter the same data, cutting duplication in reporting. Likewise, the EU’s InvestEU Sustainability Guarantee Programme provides participating banks with a Sustainability Guarantee Tool, allowing them to quickly verify company and project eligibility against programme requirements

• Signalling viability. Public involvement can enhance the credibility of SMEs’ projects and demonstrate their market potential to private financiers. By showcasing successful initiatives and organising events which facilitate matchmaking, public actors help financiers identify promising green investment opportunities. The Flexible Energy Systems programme of Business Finland promotes “reference cases” internationally and runs curated workshops and networking events allowing firms that partake in the programme to access private funding (and business partners) more easily, both domestic and internationally. Similarly, the Energy Enterprise Coach from the Netherlands Enterprise Agency organises matchmaking events where SMEs can directly pitch their proposals to investors and financiers to build credibility and reduce perceived risk.

Supporting commercially viable investments

A common feature of many successful programmes is that they support investments that are commercially viable and generate a return on investment. The involvement of private investors is not only highlighted as important because they act as a multiplier, but also because they represent a source of market discipline: banks and equity investors bring underwriting standards, pricing of risk, governance requirements, and ongoing monitoring that help ensure capital flows to viable projects rather than those sustained only by subsidies. Several case study interviews brought across the point that sustainable investments are more durable if they are also sustainable in the commercial sense and that sustainability in the environmental sense should not come at the expense of market viability.

In that respect, it is also important to note that interventions aim to reduce the risk to private investors to a reasonable level, not eliminate it entirely so private actors have a vested interest in the project. In practice this can mean requiring some private co-financing at project level, as in the case of ADB Ventures, which has adopted a co-investment approach for early- and growth-stage companies to mobilise additional funding while keeping private investors financially engaged. Another approach is structuring loss-sharing arrangements, so intermediaries retain exposure. Mexico’s NAFIN Eco Sustainable Credit Programme provides guarantees up to 80% for that reason, with part of the risk borne by banks, which also conduct standard risk assessment procedures and decide what projects to finance. Through a green synthetic securitisation, the EIB Group transfers part of the credit risk on DNB’s SME loan portfolio, freeing regulatory capital on the condition that it is redeployed into new climate-aligned SME lending. The deal ensures only viable projects are supported via capped first-loss/stop-loss features and relies on DNB’s standard underwriting and monitoring.

Balancing potential trade-offs between SME access and impact

Sustainable finance programmes face an inherent tension: ideally, they should be accessible to smaller firms and to enterprises that are not yet leaders in sustainability, since these often have the greatest potential for improvement. At the same time, programmes must safeguard public funds and deliver credible, measurable outcomes. Balancing these goals is difficult. If thresholds are kept high, programmes may achieve verifiable impact but risk excluding smaller or less mature SMEs. If thresholds are lowered to widen participation, take-up increases but the risk of dilution and weaker monitoring also grows.

This tension plays out in both eligibility criteria and due diligence processes. Programmes that adopt a tight-targeting approach—with high performance thresholds and rigorous assessments—tend to prioritise measurable impact and investment quality. Examples include the Neev II Fund in India or Denmark’s Green Accelerator, which focus on growth-stage enterprises with scalable solutions. While such approaches deliver strong returns and reduce risk, participation rates are often low; in the case of Neev II, only one in 60–70 applications succeed. Extensive due diligence requirements can also raise costs for both SMEs and financial institutions, with many intermediaries relying on external consultants to manage assessments.

On the other hand, programmes that take a broad audience approach lower thresholds and simplify procedures in order to reach more firms, expand learning effects, and build stronger project pipelines. Mexico’s Eco Sustainable Credit Programme, for instance, requires energy audits but has worked to streamline procedures and reduce collateral requirements. ADB Ventures applies a flexible reporting approach, with lighter requirements for early-stage ventures and more rigorous assessments for advanced companies. Similarly, some institutions have begun experimenting with pre-application support, simplified checklists, and digital self-assessments to cut transaction costs for SMEs (see more in section on non-financial support below).

In practice, most programmes do not make a sharp binary choice but instead seek to balance access and integrity. Graduated requirements, clear safeguards, and targeted technical assistance are increasingly used to allow more firms to qualify without undermining credibility. The challenge lies in calibrating due diligence and reporting demands so that they do not exclude the very enterprises—smaller, earlier-stage, or emerging-market SMEs—that are central to the green transition.

Choosing the right intermediaries and partners

Choosing the right delivery partner can be just as important as choosing the instrument. For complex, intermediate finance solutions, it is important to consider intermediaries with the skills, systems, and governance to execute at pace and with integrity. A good illustration is the EIF–DNB green synthetic securitisation in the Nordics, where an experienced commercial bank partnered with a public financier to transfer part of the credit risk on a portfolio of SME loans, freeing up regulatory capital to originate additional green lending. This works only when the intermediary can structure risk transfer to meet regulatory and accounting requirements, run robust SME credit processes, and report use-of-proceeds and impact accurately.

This is also an important consideration for supply-chain financing instruments, where it is useful to have partners who can aggregate demand and set credible standards. The EBRD’s Supply Chain Solutions approach shows the power of partnering with anchor buyers. Large purchasers help define eligible measures for their suppliers (e.g. equipment upgrades that meet the buyer’s sustainability standard), endorse vendor lists, and sometimes share data for verification. A large part of the success of the programme can be attributed to the involvement of trusted and capable partners.’

Partners can also play a crucial role in strengthening awareness and outreach among SMEs. The Environmental Upgrade Finance scheme in Australia for example, successfully leveraged channel partners through engaging service providers of environmentally friendly building upgrade equipment. These partners promoted the scheme directly as a financing option within their sales processes which supported uptake among SMEs.

In the context of the provision of non-financial support, having the right partners is also critical to ensure strong quality of service delivery, especially in areas where the public financial institution does not have internal expertise. The Canadian BDC Climate Tech Fund II, while not offering direct support to the end beneficiaries, often refers companies to other providers of support on a needs basis and considers the strong connection to the broader (public) eco-system as a strong point. Likewise, DBS Bank in Singapore is drawing on its connections with platform providers and consulting firms to give SMEs access to expert advice on carbon footprint calculation and the development of decarbonisation strategies.

Beyond technical capacity, the alignment of partners’ incentives with programme objectives is also essential, as is ensuring accountability through clear performance metrics. Participating banks in the Supply Chain Solutions Framework from the EBRD who are extending credit must comply with the EBRD Performance Requirements and submit annual environmental and social reports to ensure alignment with programme objectives. In a similar fashion, under the EU’s InvestEU Sustainability Guarantee programme intermediaries are required to undergo quarterly documentation and reporting. The European Investment Fund conducts audits and visits to ensure compliance and proper implementation to ensure alignment with programme objectives.

Making outreach an integral part of support

For many SMEs, sustainability is not yet a strategic priority, and even where it is recognised as important, firms often lack relevant knowledge (e.g. on what clean technologies or processes to adopt) or are unaware of available public support programmes. Many programmes, therefore, adopt systematic outreach efforts to bolster SME awareness and uptake. Typical measures include multi-channel communication through banks, sector associations and chambers of commerce, anchor-buyer supplier portals, and regional business support centres. In Slovenia, for instance, the SEF LCA voucher leverages sector associations and local chambers of commerce to disseminate calls and guide SMEs, complemented by 12 regional SPOT one-stop offices that help firms prepare applications and documentation. In Singapore, DBS Bank has started integrating sustainability into its masterclasses for micro and small enterprises to raise awareness on sustainability issues. It also provides networking opportunities with key stakeholders and circulates peer success stories among its SME clients to make sustainability more tangible and actionable.

Strengthening non-financial support for SME investments in greening and uptake of associated financing

Providing financing alone is rarely enough to ensure that SMEs can successfully participate in green transition programmes. Many firms face barriers not only in meeting eligibility requirements but also in managing the administrative and technical demands of applying for and reporting on green finance. Adding advisory services, technical assistance, and simplified procedures can broaden access without compromising standards. Subsidised audits and diagnostics, as well as coaching on ESG and impact reporting, can help SMEs meet verification requirements. At the same time, clear checklists, streamlined forms, and digital self-assessments reduce transaction costs, making it possible for credible applications to come from a much broader set of enterprises.

Several examples illustrate how this approach is being put into practice. In India, the Neev Fund II complements its equity financing with tailored non-financial support to help SMEs address weaknesses identified during due diligence. This improves both operational performance and impact outcomes. In Denmark, the Green Accelerator programme streamlines the application process through an online portal and provides pre-application support for assessing eligibility and preparing strong project proposals, which improves overall programme efficiency. In Czechia, the ENERG Programme was designed to cover up to 80% of the costs of energy assessments, directly reducing the administrative and financial burden on applicants. In Malaysia, the High Tech & Green Facility lowered reporting thresholds for smaller firms, making concessional loans more accessible.

These cases also demonstrate that thoughtful programme design can expand SME access while preserving sustainability objectives. By combining finance with advisory services, capacity-building, and procedural simplification, institutions are not only fostering broader take-up but also enhancing the credibility and effectiveness of SME greening initiatives.

Leveraging digital tools for access, uptake and efficient implementation

Given the novelty of many instruments and the need to manage volume at reasonable cost, programmes increasingly deploy digital tools and portals. Various programmes use digital eligibility checklists, work with a dedicated portal where interested companies can access all relevant information in one place and have fully digitalised the application process. For example, under the EU’s InvestEU Sustainability Guarantee, the EIF provides a web-based Sustainability Guarantee Tool and online Green Eligibility Checker to help intermediaries and SMEs pre-assess whether enterprises or projects meet the programme’s criteria, with an indicative view of climate impact where applicable. In Slovenia, the e-Voucher portal handles submission and reimbursement entirely online with two-factor digital signatures and electronic contracting, streamlining SME access to the Life-Cycle Assessment voucher. The ESG Ready Programme from DBS Bank in Singapore leverages an online tool, the Sustainability Accelerator Tool, which allows SMEs to self-assess their current sustainability performance to receive tailored recommendations on the most suitable entry point within the modular structure of the programme.

Digital tools also play an increasingly important role in supporting and streamlining sustainability reporting for SMEs (OECD, 2024[1]). This is particularly important for reporting on more complex indicators, which require SMEs to access external data sources and undergo complex calculations. Capital Market Malaysia, for example, is now working on developing a GHG emissions calculator with integrated emission factors, in response to challenges identified among SMEs in calculating their carbon footprint. Other digital initiatives are aiming to simplify SME sustainability reporting through automation processes. The Danish Business Authority for example, is piloting a system that extracts relevant data from both internal and external sources and processes it automatically to enable seamless sustainability reporting for SMEs.

Reducing SME compliance costs by aligning processes and reporting with (inter)national standards

Reporting is generally burdensome for SMEs, so programmes should keep processes simple. At the same time, public authorities still need credible verification that supported activities are genuinely sustainable (and need to apply due diligence procedures that apply to SME policies more broadly). Public bodies can draw on emerging practice from national administrations and international institutions to standardise templates, align criteria with recognised taxonomies, deploy digital portals, and adopt proportional verification.

A case in point is Malaysia’s Simplified ESG Disclosure Guide (SEDG), which offers modular templates benchmarked to GRI/ISSB/CDP so firms at different maturities can report once and reuse data. Similarly, the Life Cycle Assessment voucher from the Slovenian Enterprise Fund uses templates which are aligned with ISO 14040/14044 standards to enhance credibility and comparability. Another example is the InvestEU Sustainability Guarantee Tool/Green Eligibility Checker, which lets intermediaries and SMEs test alignment ex-ante, and which could be employed for other programmes at the (sub)regional level across the globe. A further example is Denmark’s Automated Sustainability Reporting initiative, which standardises digital data formats and a common exchange infrastructure to cut duplication. The OECD Guidance Note on Fostering Convergence in SME Sustainability Reporting can also serve as a tool to align reporting requirements with the core indicators and metrics used in major international frameworks and standards (Kuzmanovic, Koreen and Honegger, 2025[2]).

Strengthening access and impact through flexibility and adaptability

As noted in the previous section, many green and sustainability-linked SME financing instruments are still taking shape in many jurisdictions, with best practices under development. Programmes are therefore being adjusted as experience accumulates. For example, Malaysia’s Low Carbon Transition Facility introduced more demanding reporting than the earlier High Tech & Green Facility—an evolution aimed at balancing accessibility with accountability. In Czechia, the ENERG Programme has tuned its terms over time, cutting the loan rate from 2% to zero to stay competitive and allowing grants to be applied directly to reduce loan balances, which improved uptake among cash-constrained firms. At EU level, the InvestEU Sustainability Guarantee is rethinking allocation in response to oversubscription, considering ways to prioritise intermediaries that reach underserved borrowers. Finland’s Flexible Energy Systems Programme also shows administrative flexibility: it uses studies and calls to shape pipelines and offers feedback and conversion pathways (e.g. redirecting strong but ineligible grant proposals to loan instruments), reducing search and compliance costs without lowering standards.

To ensure evidence-based programmes that evolve, adapt and improve, the establishment of monitoring and evaluation systems is also essential.

Reinforcing and mainstreaming sustainability considerations in the SME financing ecosystem

Successful policies should not only finance individual projects but mainstream sustainable lending practices for SMEs. As a long-term impact, they often aim to strengthen the market infrastructure that enables repeatable, scalable transactions to take place even in the absence of any government intervention. This includes working with intermediaries with relevant expertise and skills so that climate-aligned lending becomes part of standard practices of financial institutions. The EIB/EIF–DNB green synthetic securitisation, which frees regulatory capital on SME portfolios conditional on redeployment into climate projects, is an example of this type of effort. In addition, other avenues to mainstream SME sustainability include:

• Policies that provide taxonomy-aligned eligibility and pre-screening tools can make SME lending for sustainable projects more common. The EU’s InvestEU Sustainability Guarantee Programme offers its Sustainability Guarantee Tool, which enables financial institutions to quickly and seamlessly assess SME eligibility.

• Subsidised or standardised energy audits and diagnostics that help identify eligible investments and generate verifiable baselines, such as the ENERG programme in the Czech Republic, allowing financial institutions to quantify the energy-saving impacts of their borrowers.

• Digital reporting and common data formats to cut duplication and improve interoperability. Denmark’s Automated Sustainability Reporting initiative standardises data capture and eases the reporting burden, simplifying verification for lenders and encouraging uptake.

• Modular disclosure templates mapped to international standards so that SMEs at different maturities only have to report on their sustainability performance once and can reuse data. Malaysia’s Simplified ESG Disclosure Guide (SEDG) offers step-by-step, standardised templates that help SMEs and lenders converge on comparable and consistent information.

5.3. References

[2] Kuzmanovic, M., M. Koreen and G. Honegger (2025), OECD Guidance Note on Fostering Convergence in SME Sustainability Reporting, https://www.oecd.org/en/publications/oecd-guidance-note-on-fostering-convergence-in-sme-sustainability-reporting_d95a25de-en.html.

[1] OECD (2024), Fostering convergence in SME sustainability reporting: A background study, https://www.oecd.org/en/publications/fostering-convergence-in-sme-sustainability-reporting_ffbf16fb-en.html.