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

4. SME adopters: Financial and non-financial support mechanisms

Abstract

This chapter examines the financial and non-financial support mechanisms for SMEs integrating sustainable practices into their operations. Drawing on a range of instruments such as green loans, green leases, property-linked financing, blended finance and performance-based models, it showcases how public and private actors can facilitate SMEs investments in energy efficiency, renewable energy, and resource optimisation. In addition to financing, the chapter explores non-financial measures, such as advisory services, awareness-raising campaigns, technical training and support for environmental management systems and certifications, which help SMEs identify opportunities for greening and strengthen their capacity to implement sustainable solutions.

Most SMEs world-wide need to adopt greener technologies and business practices to align with the growing focus on sustainability in the global economy. This includes SMEs with vastly different characteristics, ranging from microenterprises with 10 or fewer employees who are providing essential services to consumers in local communities, to medium-sized companies embedded in complex supply chains with increasingly stringent demands on sustainability performance. As such, these diverse enterprises need access to a wide range of financing and capacity buildings solutions to meet their greening needs.

Tailored green and sustainable financing support is critical for enabling SMEs to transition toward greener and more sustainable practices. By enabling the financing of investments in greening, notably through direct financing and risk sharing support, and by rewarding progress toward environmental targets through better financing conditions, these financing instruments and programmes have a key role to play in facilitating SMEs’ investments in resource efficiency, decarbonisation, and sustainable growth.

Non-financial support from public entities is essential in facilitating SME greening by addressing barriers beyond access to capital. Many SMEs, for instance, lack the technical knowledge, skills, and capacity required to implement sustainable practices or leverage green finance effectively. Public entities can provide targeted assistance through capacity-building programs, such as training and workshops, to improve SMEs’ understanding of sustainability strategies, environmental regulations, and market opportunities. Advisory services and resource centres can further guide SMEs in areas like decarbonisation, resource efficiency, and obtaining of green certifications.

Public entities also play a critical role in fostering the uptake of green and sustainable finance among SMEs through non-financial support. By raising awareness of available financing instruments and their benefits, public entities can help SMEs understand how tools like green and sustainability-linked loans and blended finance can align with their business goals and facilitate their investments in necessary greening technologies and processes.

Non-financial support can also help SMEs strengthen their capacities to meet sustainability measurement and reporting requirements, which are increasingly essential for accessing green and sustainable finance and participating in sustainable supply chains. Many SMEs lack the technical expertise and resources to track, measure, and report on environmental and social performance in line with evolving standards and regulations (G20SFWG, 2024[1]). Public entities can provide capacity-building initiatives, such as training programs and workshops, to help SMEs understand sustainability metrics, reporting frameworks, and data collection processes. Additionally, advisory services and digital tools can simplify compliance by offering step-by-step guidance and ready-to-use templates tailored to SME needs. The OECD has developed a Guidance Note on fostering convergence in SME sustainability reporting, providing a core set of sustainability indicators and metrics that SMEs can refer to report on their sustainability performance (Kuzmanovic, Koreen and Honegger, 2025[2])

4.1. Financial support for SME adopters

Financing solutions for these actors need to serve several important purposes, which can vary in importance depending on the specific characteristics of the enterprise:

• Reducing up-front costs: Investing in greening technologies comes with high up-front costs, which can be prohibitive particularly for smaller businesses. In fact, high upfront costs are often cited as a key constraint for greening by SMEs. For instance, in a 2023 survey of over 6000 SMEs in 13 countries globally, 68% stated that greening is too costly to implement and 51% identified specifically the cost of green technologies as a key constraint for greening (International Chamber of Commerce, 2024[3]). The cost of environmental actions was also cited as the second largest barrier for SME resource efficiency action in the 2024 Eurobarometer survey (European Commission, 2024[4]). Financial support that can help reduce the upfront investment costs of SMEs through, for example. grants, loans, subsidies or tax incentives1 – can make the difference between SMEs investing in greening or not.

• Reducing financing and investment-related risk for SMEs: Public financial support can help reduce the financial risks associated with SME investments in greening. Transitioning to sustainable practices often involves uncertainty, such as fluctuating energy prices, evolving regulations, or unproven technologies. By offering risk-sharing mechanisms like loan guarantees, blended finance or green insurance schemes, public financial support can mitigate these risks, encouraging SMEs to adopt environmentally friendly technologies or practices. Studies show that risk aversion is a key barrier to SME green investments with many SMEs fearing potential financial losses if these investments do not yield the expected returns (OECD, 2021[5]). In a UK survey, for instance, 19% of small businesses cited insufficient returns on green investments as a significant obstacle to taking such actions. Furthermore, nearly 50% of small businesses cited cost as a challenge and only 25% believed that investing in sustainability results in some or substantial savings (Small Business Britain, 2024[6]).

• Reducing financial risk for financing providers: Public financial support can also play a pivotal role in reducing the financial risks for institutions financing SMEs' green investments. Financial institutions often perceive lending to SMEs for sustainable projects as high-risk due to uncertainties around project viability, limited collateral, and potential market volatility. These compound traditional financing constraints for SMEs such as information asymmetries, high administrative costs relative to the size of the financing, etc. (OECD, 2022[7]). Public interventions, such as green credit guarantees, co-financing schemes, or first-loss provisions, can help de-risk these investments by sharing potential losses and enhancing the creditworthiness of SMEs. This not only incentivises financial institutions to provide more capital for SME greening but also fosters the development of tailored financial products for sustainability-related investments. Research indicates that de-risking mechanisms significantly improve credit flow to SMEs, bridging the financing gap and accelerating the transition to greener economies (Asian Development Bank Institute, 2018[8]).

A broad range of financing solutions can be used to enable SMEs’ adoption of greening solutions and practices. These instruments can be classified in seven broad categories including direct and indirect financing instruments, such as green loans and leases; risk-sharing instruments, such as loan guarantees and blended finance instruments; incentive-based instruments, such as grants and subsidies; performance-based instruments, including energy performance contracts; market-based instruments, such as bonds and carbon credits; sustainability-linked instruments, including loans and mini bonds; and trade finance instruments for green goods and services, including supply chain financing (see Table 4.1).

Table 4.1. Common financial support options for SMEs adopters of green solutions

Instrument	Description	Examples
Direct financing instruments
Green loans	Financing offering preferential interest rates or other more favourable financing conditions for sustainable investments. Can be provided directly or indirectly via credit lines	Energy efficiency loans for upgrading machinery Loans for retrofitting buildings Financing for installation of small-scale renewable infrastructure (e.g. solar panels, water saving equipment) Loans for purchasing of EVs & related infrastructure
Green leases	Instruments that incorporate environmental clauses into leasing agreements, allowing SMEs to access environmentally friendly energy equipment or technologies for buildings without bearing the high upfront costs	Leases for green technology including energy-efficient equipment and renewable energy Leases for green building upgrades: Leases for electric vehicle (EV) purchases Leases for EV infrastructure (e.g. EV charging stations and related infrastructure for businesses) Sustainability-focused tenant improvement leases
Property-linked loans (PPLs)	Loans designed for environmental property refurbishments, tied to the property rather than the borrower, with repayment integrated into property taxes.	PPLs for upgrading energy efficiency of property PPLs for installing renewable energy systems on property PPLs for improving water efficiency of property
Green revenue-based loans	Financing whereby repayment terms are tied to revenues generated from green projects	Solar panel installation loans where repayment is structured around generated savings Loans for installation of green technologies which convert waste into renewable energy where repayment is a percentage of the energy revenue generated
Risk sharing instruments
Green guarantees	Financing mechanisms providing a financial backstop that ensures partial repayment to lenders if an SME defaults, reducing the risk for private lenders. Green guarantees offer more favourable financing terms than other guarantee instruments.	Guarantees to financial intermediaries to provide financing at favourable terms to SMEs adopting green machinery and equipment
Blended finance	Strategic use of public or philanthropic capital to de-risk investments and attract private capital into projects that deliver environmental benefits.	Concessional loans paired with grant or technical assistance components Viability-gap-funding, where grants make the financing of the rest of the project viable for private sector partners
Green synthetic securitisation	Credit risk of a portfolio of loans is transferred to third-party investors using credit derivatives or guarantee. The existing portfolio and/or the new lending (use-or-proceeds) is green.	Financing for climate friendly investments such as clean energy transport technologies
Incentive-based instruments
Grants and subsidies	Non-repayable financing in the form of lump sum or recurring payments that can help SMEs cover high upfront costs of greening investments	Grants for purchasing renewable energy systems or energy-efficient equipment Subsidies to offset operational costs of green investments/processes Subsidies/grants for improving energy efficiency of buildings Subsidies to calculate environmental footprint of goods & services
Performance-based financing instruments
Energy Performance Contracts (EPCs):	Instruments where repayment is tied to energy cost savings achieved through efficiency improvements	Energy efficiency upgrade of manufacturing equipment, where energy savings provide repayments Energy-efficiency LED bulbs retrofit
Pay-as-you-save models	Financing where repayments are directly linked to savings generated by green technologies, such as solar panels or efficient HVAC systems.	Installment of energy-efficient HVAC system Insultation and window upgrades with generated savings providing repayment
Market-based instruments
Green bonds	Debt issued by financial institutions or SMEs to finance greening investments as well mini bonds issued by SMEs themselves. Differs from other bonds in terms of financing conditions and premia for green performance.	Bonds issued by PFIs or MDBs to raise capital for financing SME green projects, like renewable energy installations. Mini bonds issued by SMEs themselves to finance greening projects
Sustainability-linked instruments
Sustainability-linked loans	Loans where interest rates are tied to the sustainability performance of the entity	Loans with interest rates that decrease if SMEs meet predefined sustainability performance targets (SPTs), like reducing waste by a certain percentage or transitioning to renewable energy. Sustainability-linked supply chain financing
Trade instruments
Green Trade Finance	Reduces the risk for exporters and importers of green goods, services, and technology. Facilitates SME participation in green supply chains through mechanisms for easing cash flow challenges or de-risking transactions	Guarantees and letters of credit for green trade transactions Supply chain financing for producing energy efficient equipment Short term trade loans for the import or export of green goods and services Accounts payable and receivable financing for buyers and exporters of green goods

Direct or indirect financing instruments provide capital to SMEs for purchasing or adopting green technologies and processes. These instruments can include:

Green loans support SMEs in financing environmentally sustainable projects, such as renewable energy installations, energy-efficient upgrades, or waste reduction initiatives. These loans often feature more competitive or subsidised financing costs and more flexible terms to incentivise SMEs’ investments in actions that reduce their environmental footprint and promote long-term cost savings. For instance, in Czechia, long-term interest-free loans are provided to SMEs for building retrofits with options to convert energy savings into financing to reduce the loan principal (see case study on the ENERG programme in Czechia in Annex A).

Green loans can vary in maturity depending on the SMEs’ financing needs:

• Short-term loans typically have repayment periods of less than a year and are used to address working capital needs, manage cash flow, or cover operational costs. In the context of greening, short-term loans can help SMEs finance immediate, smaller-scale green initiatives such as energy-efficient equipment upgrades, installing solar panels, or adopting waste-reduction technologies. Several examples of this kind of financing are included in Box 4.1. Under its flagship Multiple beneficiary intermediated loan (MBIL) programme, for example, the European Investment Bank (EIB) offers various green financing products for SMEs, including working capital financing, leasing and others, that are provided through intermediary banks.

• Medium- and long-term loans, on the other hand, are often used to finance investments that require more substantial capital outlays and generate returns over a longer period. For SMEs, medium-and long-term loans can finance endeavours like transitioning to sustainable supply chain practices, implementing renewable energy solutions, other infrastructure development, or extensive operational transformations. For example, Indian SMEs can access medium-term financing provided by the Small Industries Development Bank of India (SIDB) for capital intensive investments in clean energy and energy efficiency measures. The funding is provided on favourable terms, collateral free and with reduced interest rates (2.5% below the market interest rate) and covers up to 90% of the project costs (see Box 4.1). Likewise, Mexican SMEs can purchase energy-efficient equipment through a medium-term loan provided by the Sustainable Eco Credit programme, which also covers the costs of external consulting services to assist SMEs in selecting the most suitable equipment (see case study from the Nacional Financiera in Mexico in Annex A).

Green loans can also vary depending on the mode of provision. Funding can be extended directly from the public development bank to the SME clients or provided indirectly via credit lines through relevant public or private intermediaries. For instance, the Green Economic Financing Facility (GEFF) of the European Bank of Reconstruction and Development (EBRD)2 issues green credit lines to partnering financial institutions in Central and Eastern Europe, Central Asia, the Southern and Eastern Mediterranean, and some parts of Sub-Saharan Africa, to facilitate lending to SMEs for investments in energy efficiency, renewable energy, water savings, and waste reduction. The funding is provided at competitive interest rates and repayment terms often tailored to the local market. Some GEFF programs also include incentive grants (e.g., cashbacks) funded by donors or other international organisations for completed and verified green investments (see Box 4.1).

Green leasing products help SMEs adopt sustainable practices by providing access to eco-friendly equipment, technologies, or vehicles without requiring significant upfront investment and by spreading costs through periodic lease payments. Green leases often include favourable terms or incentives for green solutions and are often provided by private entities with public support in the form of risk sharing mechanisms (see Box 4.1). For example, in Germany, the state-owned development bank KfW provides financing to leasing companies, which in turn offer favourable leasing terms to SMEs and self-employed professionals for acquiring new corporate equipment and vehicles to improve sustainability performance (see Box 4.1).

Property-linked loans enable SMEs to finance sustainable property upgrades, such as energy-efficient retrofits or renewable energy systems, by linking the loan to the property rather than the business. This approach makes it easier to transfer the loan if the property is sold, incentivising green investments while reducing the financial risk for SMEs. Examples of such financing programmes include the Environmental Upgrade Finance scheme in Australia, which finances the installation of energy and water efficiency upgrades, renewable energy installations and waste minimisation projects in industrial and commercial buildings. Under this programme, property owners receive upfront 100% of the financing for approved projects and the repayment is conducted over a term of up to 20 years. Repayments are made through the local council rate systems, with generated energy savings being able to offset repayments (see case study on Australia in Annex A).

Box 4.1. Examples of direct financing instruments for adopters

Green loans

Australia: The Clean Energy Finance Corporation (CEFC) is collaborating with the National Australia Bank in implementing the Equipment Finance – Energy Efficiency Bonus programme. It provides favourable financing for energy efficient upgrades such as upgrading vehicles to EVs, improving equipment or increasing the use of renewable energy. Financing can range from AUD 10 000 (USD 6 200 and EUR 5 600) to AUD 5 million (USD 3.1 million and EUR 2.8 million), with a 0.7% discount on NAB’s standard equipment financing rate. Repayment periods can go up to 10 years. The programme commenced in 2015 with an initial investment of AUD 120 million (USD 74.4 million and EUR 67.2 million) from the CEFC. By 2017, the programme had already financed more than 1,000 clean energy assets in Australia. Strong uptake was noted especially amongst agribusiness customers, using the loans to finance equipment upgrades, especially in the area of the Great Barrier Reef. Due to its strong uptake, the CEFC provided an additional investment of AUD 180 million in 2017.

Czechia: The National Development Bank is providing interest-free green loans under its ‘Energ’ programme to SMEs in Prague implementing energy-saving projects. This primarily includes building retrofitting measures, such as reconstructing electricity and gas distribution systems or replacing air conditioning systems. The interest-free loans are long term, with repayment periods of up to 10 years, and can amount to a maximum of CZK 60 million (USD 2.7 million and EUR 2.4 million) covering up to 70% of the project costs. The programme features a mechanism whereby generated energy savings from implemented projects can later be converted into a financial contribution, which can reduce the loan principal by up to 7%. The costs for conducting the energy savings assessment can also be partially subsidised by the programme.

Chile: The national development bank, Banco Estado, offers Ecomobility Loans tailored for SMEs to support the acquisition of new electric vehicles and the development of associated charging infrastructure. These loans can cover up to 100% of financing costs and feature preferential terms, including reduced interest rates and extended repayment periods of up to 20 years.

Greece: The Hellenic Development Bank (HDB) is providing Green Co-Financing loans through participating financial intermediaries to SMEs who are implementing energy transition projects. Eligible projects include green mobility, energy efficiency or renewable energy projects. The total programme portfolio is EUR 415 million. SMEs benefit from a 40% interest-free capital contribution, while the remaining 60% is financed by financial intermediaries with interest rates subsidised by HDB up to 2%.

India: Indian SMEs in manufacturing and services can access financing under the ‘4E Scheme – End to End Energy Efficiency’ by the Small Industries Development Bank of India for capital-intensive projects which aim to increase energy efficiency and renewable energy use, like solar panel installations or energy-saving technology. The scheme offers medium-term loans repayable in 5 years (extendable to 7), covering up to 90% of the project cost without collateral requirements, at a maximum amount of Rs. 7.5 crore (USD 903 600 and EUR 825 000). Indian MSMEs benefit from concessional financing of about 2.5% below the market lending rate. The scheme further offers a subsidised technical consultant service for conducting energy audits and implementation support.

Mexico: The Eco Sustainable Credit Programme by the Nacional Financiera (NAFIN) helps SMEs transition to a low carbon economy. The programme is implemented in collaboration with the Ministry of Finance and Public Credit (SHCP) and the Ministry of Environment and Natural Resources (SEMARNAT). SMEs can access loans on favourable terms of up to MXN 15 million (USD 825 000 and EUR 700 000) to finance the purchase of energy-efficient and renewable energy machinery, with a repayment period of up to 8 years. The programme fully subsidises the cost of an energy audit through a partnering company, enabling SMEs to select the most suitable equipment. Over the course of two years, 1 000 projects have been implemented, leading to a reduction of 100 000 tons of CO2e.

Sweden: Swedish SMEs can access green loans from the public development bank Almi for projects such as energy efficiency improvements, building retrofits, and heat pump installations. These loans offer favourable terms, including extended repayment periods of up to 10 years and lower interest rates. The loans are backed by InvestEU guarantees and projects must be in line with requirements inspired by the EU’s Sustainable Taxonomy to qualify for financing. SMEs can book a free meeting to discuss their investment plans and assess eligibility.

Thailand: The Small and Medium Enterprise Development Bank of Thailand (SME D Bank) is providing support to SMEs and entrepreneurs through its SME Green Productivity loans. Eligible activities include the installation of clean energy systems or the purchase of equipment that enhances environmental performance. The programme offers reduced interest rates fixed at 3% per year for the first three years with a maximum amount of THB 10 million (USD 280 000 and EUR 255 000). Additionally, borrowers benefit from a 12-month grace period on principal repayments.

Türkiye: The World Bank has implemented the Türkiye Green Industry Project in partnership with the Ministry of Industry and Technology, Small and Medium Enterprises Development Organization of Türkiye (KOSGEB) and the Scientific and Technological Research Council of Türkiye (TÜBITAK). The USD 450 million project supports Turkish industrial SMEs in adopting green and sustainable practices. KOSGEB provides 250 million in reimbursable support to SMEs for green practices such as solar panel installations, circular economy, and resource efficiency initiatives. The programme offers support for up to 12 months, covering 60% to 70% of eligible costs, including machinery, equipment, software and personnel expenses.

Africa: The International Fund for Agricultural Development (IFAD) is offering green loans and grants to agricultural SMEs in Africa who are implementing environmentally friendly practices into their operations through the Inclusive Green Financing Initiative (IGREENFIN I). The programme consists of three components, a “Green Business Financing Facility” that will provide funds for on-lending to select Local National Agricultural Banks (LNABs), a technical assistance component, and a regional support programme to increase learning and innovation across the region.

Europe: The EIB Group is helping agricultural SMEs in becoming more sustainable through the Pan-European agricultural programme, with a total funding capacity of EUR 3 billion. This initiative offers loans for both investments and working capital, with SMEs able to borrow up to EUR 25 million. The funding can cover 50% to 100% of project costs, and loans come with flexible repayment terms of up to 15 years. The funding can further be backed by guarantees provided by the EIF. Eligible projects include those focused on sustainable and regenerative agriculture, water management systems, integration of renewable energy, sustainable aquaculture, and resource efficiency measures.

International: The European Bank for Reconstruction and Development (EBRD), provides indirect green lending to SMEs adopting green technologies through partnering financial intermediaries under the Green Economy Financing Facility (GEFF). This initiative combines financing with technical assistance to identify eligible green technologies focused on energy efficiency, renewable energy, water savings, and waste reduction. The green credit lines are mainly going to emerging markets - spanning 29 countries - with funding of EUR 6.3 billion. The funding is provided at competitive interest rates and repayment terms often tailored to the local market. Some GEFF programs include incentive grants (e.g., cashbacks) funded by donors or other international organisations for completed and verified green investments. The projects have so far prevented the release of an estimated 10 million tonnes of CO₂ emissions into the atmosphere.

Green leasing products

Germany: The public development bank KfW offers the Sustainable ERP Global Loan-Leasing Programme to support SMEs in financing energy-efficient and sustainable investments. KfW extends global loans to partner leasing companies enabling them to provide competitive leasing options to end-users for leasing equipment such as energy-efficient machinery, green mobility, and renewable energy technologies. The programme offers favourable interest rates and flexible repayment terms.

Portugal: The Banco Português de Fomento (BPF) is offering indirect financing to Portuguese SMEs through its Credit Line for Decarbonization and Circular Economy Programme, aimed at fostering sustainable business practices. Eligible projects include initiatives related to energy efficiency, circular economy, and renewable energy infrastructure. SMEs can access financing of up to EUR 2 million by submitting a request through participating credit institutions, which evaluate the project and provide funding under the program's favourable terms. Beneficiaries can take advantage of subsidised interest rates at 1.5%, with long repayment periods of up to 10 years.

South Africa: The Industrial Development Corporation is encouraging South African SMEs to implement renewable energy and energy efficiency projects into their business. The Green Energy Efficiency Fund (GEEF) is a R 500 million fund (USD 28.5 million and EUR 25.9 million) launched in 2011, designed to support SMEs in achieving energy savings and reducing emissions. Loans range from R 1 million (USD 56 900 and EUR 51 700) to R 5 million (USD 2.86 million and EUR 2.6 million) and must be paid back within 15 years. These loans are offered at an interest rate of prime minus 2%. SMEs can further benefit from accompanying technical support, including an energy assessment of the proposed project. This assessment helps to mitigate investment risk by evaluating the expected economic and financial benefits of the project and providing guidance on selecting the appropriate equipment.

International: A public-private partnership between the European Investment Bank (EIB) and Deutsche Leasing provides green leases to SMEs and midcaps in Germany and Eastern Europe. The initiative supports the acquisition of green technology, energy-efficient machinery, and low-carbon mobility solutions. The programme offers flexible repayment terms and competitive interest rates, benefitting SMEs who wish to adopt more sustainable technologies but lack the capital to cover high upfront costs. The project has mobilised EUR 560 million, with the EIB contributing EUR 200 million and 30% allocated to green leases.

Property-linked loans

Australia: The Environmental Upgrade Finance scheme helps SMEs who own properties to install energy-efficient and renewable energy upgrades without affecting cash flow. Eligible upgrades include energy efficient technology, renewable energy systems, water saving technologies and sustainable building materials. The loans are linked to the property, covering up to 100% of the financing with no need for upfront capital or additional security. Repayments are long-term and collected through local council rate systems. This programme benefits SMEs who want to make sustainable upgrades to their buildings without having to pay high upfront capital costs. The sustainable building upgrades will help SMEs reduce energy costs in the long-term.

United States: The Property Assessed Clean Energy (PACE) programme in the US enabled the installation of energy-efficient HVAC systems, solar panels, insulation, and water conservation measures in residential and commercial properties. SMEs had to own the property to access this funding. Under this programme, property owners received upfront 100% of the financing for approved projects and the repayment was conducted over a term of up to 20 years through additional charges (repayment instalments + interest) on the property tax bill. Since the repayment obligation was tied to the property rather than the individual, if the property was sold, the remaining repayment obligations typically stayed with the property (and the new owner) rather than following the seller. The programme also sought to make the upgrades cost-neutral or even profitable for the owner over time with growing energy savings, as those savings could partially or fully offset the additional costs in the annual tax bills. PACE programs often included educational resources for property owners to help them understand the benefits, obligations, and process of participating in PACE financing. Many PACE programs provided training for contractors to ensure they are knowledgeable about eligible improvements, program requirements, and consumer protection standards. The programme ended in 2025.

Sources: (National Development Bank Czechia, 2025[9]), (Small Industries Development Bank of India, 2025[10]), (BancoEstado, 2025[11]), (Almi, 2025[12]), (Clean Energy Finance Corporation, 2015[13]), (Nacional Financiera, 2025[14]), (European Bank for Reconstruction and Development, 2025[15]), (Kreditanstalt für Wiederaufbau, 2025[16]), (European Investment Bank, 2024[17]), (U.S Department of Energy, 2025[18]), (Sustainability Victoria, 2025[19]), (World Bank, 2024[20]), (Banco Português de Fomento, 2025[21]), (Industrial Development Corporation, 2025[22]), (Hellenic Development Bank, 2025[23]), (IFAD, 2025[24]), (Money and Banking, 2024[25]), (EIB Group, 2024[26])

Risk sharing instruments, such as green guarantees and green insurance products (see Table 4.1), help reduce the financial risks for both SMEs and financial institutions involved in greening investments. Green risk-sharing instruments differ from non-green ones by specifically targeting projects that deliver environmental benefits. As a result, they can provide more favourable terms and can come with additional technical or capacity building support. Common green and sustainable risk-sharing instruments include:

Green guarantees provide a financial backstop, ensuring partial repayment to lenders if the SME defaults on its repayment obligations. Unlike standard guarantees, green guarantees are tied specifically to projects with measurable environmental benefits and often come with incentives like reduced fees or technical assistance to promote green investments.

Guarantees can differ based on their structure and purpose. In the case of direct or indirect financing instruments for SMEs, the most common guarantee instruments include loan guarantees, whereby a portion of the repayment to lenders is guaranteed for loans directed at green projects. Some examples of these kinds of financing products are included in Box 4.2. In Mexico, for instance, he Fideicomisos Instituidos en la Relación con la Agricultura (FIRA), supports agricultural SMEs with loan guarantees covering 40% to 80% of the amount, offering higher coverage for underserved groups like women, youth, and indigenous producers. Complementary non-financial support is provided in the form of technical assistance, training, and project validation support. In Europe, the InvestEU Sustainability Guarantee provides financial intermediaries with guarantees which cover up to 70% of losses to unlock financing under favourable conditions to SMEs who are undergoing green initiatives (see case study on the InvestEU Sustainability Guarantee in Annex A)

Blended finance combines public, philanthropic, and private capital to reduce risks and improve the viability of sustainable investments. As noted, SME adopters often face challenges with upfront costs and limited access to affordable financing. Blended finance can address these issues by leveraging concessional funding—such as grants, subsidies, or first loss guarantees—to lower investment risks and attract private capital. The combination of loans and grants is also helpful for incentivising financing of investments that are not capable of generating sufficient economic returns or cost savings to be viable without additional support, and it can help stimulate both the supply and demand for such financing and investment. Examples of such instruments are included in Box 4.2

In Poland, for example, the Ecological Credit Programme provided by the public development bank Bank Gospodarstwa Krajowego (BGK) enables Polish SMEs to enhance energy efficiency in their operations through blended financing incorporating green credit and a non-refundable grant. The programme includes the provision of credit lines to intermediary banks, which can be used to finance up to 100% of projects’ costs. This funding is combined with a so-called “ecological bonus” in the form of a non-refundable grant that can repay up to 80% of the loan’s principal (the actual amount is determined by BKG and the intermediary bank depending on the size of the enterprise, its location and the subject of the investment).

Green synthetic securitisations enable financial intermediaries to free up more capital for green financing. Green loans are pooled and the credit risk of the loan portfolio is transferred to and covered by a third party. For example, in Europe, DNB, a Norwegian commercial lender, together with the EIB group, is offering financing through green synthetic securitisation to Nordic SMEs who are investing in clean transportation. The EIB group provides credit risk protection on the DNB’s loan portfolio, through the process of Significant Risk Transfer, unlocking more capital for the DNB to allocate to green financing (see the EIB-DNB case study in Annex A).

Box 4.2. Examples of risk sharing instruments

Green guarantees

France: the public development bank Bpifrance is offering a Green Development Guarantee to projects related to the ecological and energy transition. Eligible projects include energy efficient technologies, renewable energy solutions, waste reduction initiatives and production of eco-friendly products and services. The guarantee can cover various financing instruments such as medium to long term loans, leasing agreements, as well as financial leasing, with a guarantee rate of up to 80%.

Mexico: The Fideicomisos Instituidos en la Relación con la Agricultura (FIRA) is offering guarantees to SMEs who are operating in the agricultural sector and implementing sustainability measures into their practices. The guarantee coverage can vary depending on the specific program and the profile of the borrower. For instance, certain programs may offer coverage ranging from 40% to 80% of the loan amount, with higher coverage ratios potentially available for underserved groups such as women, youth, and indigenous producers. In addition to financial guarantees, FIRA offers technical assistance, training, and technology-transfer support to agricultural SMEs. FIRA also assists SMEs in the validation of sustainable projects by covering validation expenses and offering specialized technical advice at no cost. This support includes the preparation of technical documents required by validating entities and assistance in interactions with financial intermediaries to expedite credit evaluations and eligibility assessments.

Thailand: The Small Industrial Credit Guarantee Corporation (TCG) is providing guarantees on the SME Green Productivity loans provided by the Small and Medium Enterprise Development Bank of Thailand (SME D Bank). TCG can guarantee loans of up to THB 40 million (USD 1.2 million and EUR 1 million) per SME, with an annual guarantee fee of 1.5%, waived for the first four years. The guarantee mechanism is expected to facilitate access to finance for SMEs, unlocking over 300 additional loans to support green investments.

Africa: The Green Guarantee Facility, provided by the Nordic Development Fund and the African Guarantee Fund, is offering guarantees for financing SME green projects in the domains of sustainable energy, sustainable agriculture, resource management and green services. Guarantees can be provided in the form of loan guarantees, equity guarantees and green fundraising guarantees. The guarantee coverage rate can go up to 75% and the programme offers accompanying capacity building support to both financial institutions and SMEs.

EU: The EU, under the InvestEU Sustainability Guarantee programme implemented by the European Investment Fund (EIF), is offering guarantees to financial intermediaries, such as banks and other types of financial institutions, across the EU to provide favourable green debt financing to SMEs that are enablers, innovators and adopters of green technologies. The guarantee supports sustainable investments as per the criteria of the EU Taxonomy, targeting key areas such as climate change mitigation and adaptation, the circular economy, and biodiversity protection, among others, covering up to 70% of the potential losses. The guarantee facility enables SMEs to access favourable financing terms, such as lower interest rates, reduced collateral requirements and longer loan tenures. Additionally, it includes an advisory tool, the Sustainability Guarantee Tool, to assist implementation, offering financial intermediaries and SMEs support in assessing project eligibility and estimating the climate impact of investments.

Blended finance

Germany: In Germany, KfW offers loans to SMEs to finance the construction or renovation of energy efficient buildings through the CO2 emission reduction loan programme. Loans are provided by commercial banks with a repayment period of up to 10 years and an interest rate subsidy and capital rebate, based on the energy savings achieved. The rebate can reach up to 27.5% for renovations and 50% for new constructions. In practice, the rebate reduces the loan tenor by writing off the final annuities owed by the borrower. This effectively shortens the repayment period for the recipient.

Poland: The Bank Gospodarstwa Krajowego (BGK) provides the Ecological Credit Programme, designed to support SMEs in implementing energy efficiency measures in their buildings and operations. Eligible projects include investments aimed at improving energy efficiency by at least 30%, such as modernisation of machinery andthermo-modernization of buildings, and installation of renewable energy sources (RES). The programme includes the provision of credit lines to intermediary banks, which can be used to finance up to 100% of projects’ costs. This funding is combined with a so-called “ecological bonus” in the form of a non-refundable grant that can repay up to 80% of the loan’s principal (the actual amount is determined by BKG and the intermediary bank depending on the size of the enterprise, its location and the subject of the investment). A total of PLN 1.32 billion (USD 303.6 million and EUR 290 million) is allocated for co-financing under the programme, with the grants funded by the European Union.

Slovakia: In Slovakia, SMEs who are implementing renewable energy or energy efficiency projects can access funding from the SlovSEFF III (Slovak Sustainable Energy Financing Facility). The programme is a collaboration between the EBRD, Ministry of Environment of the Slovak Republic and the Ministry of Agriculture, Food and Environment of Spain. The SlovSEFF III offers credit lines to local banks, who pass them on as loans to SMEs implementing sustainable energy projects. The programme incentivises GHG emission reductions through linking a project’s GHG emission reduction potential to incentive payments, which are financed by carbon credit transactions between the Slovakian and Spanish governments. Loans are combined with capital grants ranging from 5% to 20% of the loan amount. Participating SMEs can further benefit from technical assistance, such as receiving support for conducting energy audits and calculating GHG emissions.

Africa: A public-private initiative, the Africa Agriculture and Trade Investment Fund (AATIF) provides financing to agricultural SMEs who are implementing sustainable practices. Financing is provided both in direct form, providing loans or equity to African agribusinesses, or indirectly, providing funding to financial intermediaries, who pass it onto agricultural SMEs. The fund employs a first-loss structure, with public financial institutions absorbing initial losses to encourage private sector participation. Investments must meet the IFC’s Performance Standards on Environmental and Social Sustainability to be eligible. AATIF also includes a Technical Assistance Programme that offers grant-based support to help projects achieve their development goals. The fund, totalling USD 146 million, is backed by key public institutions such as the KfW, the German Ministry for Economic Development and Cooperation (BMZ), the United Nations Environment Programme (UNEP) and the International Labour Organization (ILO).

Green synthetic securitisation

The Nordics: DNB Bank ASA (DNB) and the EIB group are providing EUR 190 million to fund SMEs’ green initiatives. Eligible projects include leasing clean energy vehicles and investing in clean transport technologies (e.g.in the construction sector). The funding is facilitated through synthetic green securitisation, with the EIB Group offering credit protection on DNB's EUR 1.5 billion loan portfolio. This arrangement allows DNB to free up additional capital and tooffer SMEs more favourable financing conditions for undertaking green initiatives.  The EIF provides credit risk protection to DNB on the mezzanine tranche of EUR 95 million, which is then counter-guaranteed by the EIB. This structure ensures that the EIB Group assumes the mezzanine tranche risk of the referenced portfolio. Key features of the transaction include synthetic excess spread, a replenishment period, as well as a pro-rata amortisation of both the senior and mezzanine tranches, subject to performance triggers.

Sources: (European Investment Fund (EIF), 2025[27]), (Bpifrance, 2025[28]), (Gobierno de Mexico, 2025[29]), (Nordic Development Fund, 2025[30]), (BGK, 2025[31]), (IEA, 2019[32]), (European Investment Bank (EIB), 2024[33]), (Africa Agriculture and Trade Investment Fund, 2025[34]), (Money and Banking, 2024[35])

Incentive-based instruments directly reduce the financial burden of investing in sustainable activities, often without requiring repayment. By effectively lowering the cost of capital and operating expenses, these incentives make it more feasible for SMEs to experiment with new solutions, scale up their green initiatives, and transition toward more sustainable business models. Incentive-based instruments can come in the form of:

Grants and subsidies help reduce the financial burden of implementing environmentally friendly initiatives for SMEs. These financial incentives can be offered as one-time lump sum payments or as ongoing support through instalments or recurring payments, particularly for projects that require long-term investment and maintenance. The funding can also cover external consultancy services and other technical support for SMEs that need to adopt green technologies and practices.

Grants are also important complements to other financing instruments as part of hybrid or blended financing solutions (see above) to incentivise provision and uptake of such financing. In this context grants can be used to: provide technical support such as covering project preparation and implementation costs (e.g. coaching or energy audits); subsidise interest rates or guarantee fees in combination with loans or guarantee instruments; reduce investment costs for the financing recipients such as SMEs; and provide capital rebates to create incentives to reach certain objectives like energy efficiency standards (rebates increase with energy savings as confirmed by energy audits).

Some examples of incentive-based instruments are included in Box 4.3. In Austria, for instance, SMEs can access grants to cover machinery investment costs or consulting services and employee trainings for the implementation of energy management systems. In Slovenia, SMEs can receive grants for advisory services to conduct product life cycle assessments, which help identify environmental impacts and potential green investment needs (see case study from the Slovenian Enterprise Fund in Annex A)

Tax incentives are provided by governments to help reduce the financial burden for SMEs investing in environmentally sustainable technologies. These incentives can include tax credits, deductions, or accelerated depreciation. As mentioned in the introduction, since these instruments are generally not used or implemented by public financial institutions they are not further elaborated on in this report.

Box 4.3. Examples of incentive-based instruments

Grants and subsidies

Austria: The public promotional bank Wirtschaftsservice (aws) offers grants to help SMEs implement energy management systems. The grants can cover external consultancy services, employee trainings, and investments for the required technology. The grants are awarded on a first-come, first-serve basis and can go up to EUR 50 000 of which up to 50% can be used for consultancy services and training costs and 30% for capital investments. The projects should be completed within one to two years.

Slovenia: The Slovenian Enterprise Fund offers a Voucher for Integrated Environmental Impact Assessment to support SMEs in transitioning to a more sustainable business model. The funding for this advisory service facilitates the implementation of Life Cycle Assessments (LCA), which evaluate the environmental impacts arising throughout a product's life cycle. Funding goes from EUR 3 000 up to EUR 9 999.99.

Türkiye: TÜBİTAK (Türkiye's Scientific and Technological Research Council), in collaboration with the World Bank, offers support to SMEs with the transition to greener practices. The Climate-informed and Green Innovation Technology Extension Program offers grants to SMEs to cover external consulting services in areas such as green technology solutions, capacity analysis and business roadmap preparation. Grant support is offered for a maximum of 6 months and TÜBİTAK covers 90% of the costs, up to TL 210 000 (USD 11 340 and EUR 5 660 equivalent)

Sources: (aws, 2025[36]), (Interreg Europe, 2025[37]), (TÜBİTAK, 2025[38]).

Sustainability-linked instruments tie the financing terms (e.g. interest rates or payment schedules) to an SME’s performance against predefined sustainability-related targets. Unlike green instruments—which often require the proceeds to be used for a specific green project—sustainability-linked instruments measure overall improvements in sustainability metrics (for example, reductions in carbon emissions, energy use, or waste) across the entire business. By rewarding SME adopters with better financing conditions as they meet or exceed sustainability goals, these instruments encourage a broader integration of sustainable practices into day-to-day operations, rather than focusing solely on a single green investment. Common sustainability-linked instruments for SMEs include:

Sustainability-linked loans provide debt financing that is linked to improvements in pre-defined sustainability-related key performance indicators. An example of this kind of support includes the Industrial Bank of Korea’s ESG Successful Management Loan, offering reduced interest rates to SMEs that demonstrate improvements in their sustainability performance (see case study from the IBK, Korea in Annex A). In Denmark, SME farmers can obtain a 10-30% interest rate reduction based on their sustainability score in farming practices (see Box 4.4).

Box 4.4. Examples of sustainability-linked instruments for adopters

Sustainability-linked loans

Brazil: Banco do Brasil, in collaboration with the World Bank, provides sustainability linked loans to SMEs through the Brazil Climate Finance Project. SMEs can obtain financing for investments in low carbon technologies and equipment. The project also provides accompanying technical assistance, helping SMEs in implementing climate mitigation plans and accessing carbon credit markets. The USD 500 million project is expected to lead to emission reductions of up to 90 million tonnes of CO₂ equivalents by 2030.

Denmark: SME dairy producers are encouraged to adopt green practices through EIFO’s sustainability-linked loans. This industry-led initiative uses the climate check model of the Danish Dairy Board (FarmAhead), developed by Arla, as a basis, allowing farmers to use the associated tool to assess the environmental impact of their farming practices. Based on their performance across key sustainability indicators such as feed efficiency, land use, protein efficiency, and others, farmers receive a score that EIFO uses to determine financing conditions. Farmers with a score above the national average qualify for interest rate reductions in the range of 10% to 30%.

Japan: The Development Bank of Japan (DBJ) offers Sustainability-Linked Loans (SLLs) to SMEs, with loan terms structured around the company's performance in achieving sustainability-related performance targets (SPTs). These targets are set by the SME and typically include objectives such as reducing CO₂ emissions, improving energy efficiency, and pursuing other green initiatives that align with environmental goals. The terms of the loan, such as interest rates or repayment conditions, are directly tied to the SME’s progress toward meeting these sustainability targets. SMEs participating in the programme are required to provide a mid-term report to DBJ, demonstrating their achievements in relation to the set SPTs. If the SME successfully meets or exceeds its sustainability targets, the loan terms are adjusted favourably, often resulting in lower interest rates or better financing conditions. In addition to the financial support, DBJ provides non-financial services to SMEs through its engagement dialogue, where the DBJ assists SMEs in setting SPTs and implementation through visualising sustainability management.

Korea: the Industrial Bank of Korea offers the ESG Successful Management Loan to SMEs, with loans up to KRW 1 billion (USD 750 000 and EUR 690 000). Under this sustainability-linked loan programme, the interest rate is reduced based on the SME’s ESG performance, with reductions ranging from 1% for "top-tier" SMEs, 0.5% to those rated as ‘’excellent’’, and 0.3% for those rated as "good." The loan also includes free ESG assessment and consulting services, provided by the Korean Chamber of Commerce and Industry to help businesses improve their sustainability practices.

Sources: (EIFO, 2024[39]), (Ministry of the Environment, 2022[40]), (World Bank, 2022[41]), (DBJ, 2025[42]).

Green trade finance includes financing instruments which reduce risks for importers and exporters involved in the trade of green goods, technologies, and services. It facilitates sustainable trade by offering tools such as green letters of credit, sustainability linked trade loans and supply chain financing among others. For example, the Climate Smart Programme from the International Finance Corporation offers trade finance instruments to SMEs trading goods related to renewable energy or energy efficiency. The programme provides guarantees for trade finance instruments such as letters of credit or advance payment guarantees. Furthermore, Singaporean SMEs can benefit from extended payment terms for buyers and preferential rates for suppliers of green goods and services under the Green and Sustainable Trade Financing Programme (see Box 4.5). The EBRD supports SMEs in accessing green supply chain finance by partnering with banks to offer risk-sharing and working capital support, as well as grants and advisory services (see case study from the EBRD in Annex A).

Box 4.5. Examples of green trade finance for adopters

Singapore: DBS Bank is incentivising green trade and supply chain opportunities through its Green and Sustainable Trade Financing programme. Within this programme, DBS Bank is offering various trade financing instruments to reduce payment risk, such as banker's guarantees, and letters of credit. In addition to risk mitigation, DBS Bank provides direct financing for green trade through solutions like accounts payable financing and accounts receivable financing (see Glossary). Furthermore, the programme includes green supply chain financing, which facilitates extended payment terms for buyers and allows suppliers to access funds at preferential rates.

International: The Climate Smart Trade Programme by the International Finance Corporation (IFC) promotes the trade of climate-focused goods and services. It builds on the Global Trade Finance Program by offering guarantees to financial institutions for trade-related payment obligations, thus reducing risks and facilitating new trade opportunities. The programme provides price incentives or extended tenors for green goods and services. Guarantees come in various forms, including letters of credit, trade-related promissory notes, and advance payment guarantees, among others (see Glossary). Eligible goods include those related to renewable energy and energy efficiency. Since 2010, the IFC has supported more than USD 2.4 billion in trade deals.

Supply chain finance

International (IFC): The Global Supply Chain Finance Programme (GSCF) from the IFC provides financing to SME suppliers who are operating both in domestic, as well as international markets. With partnering financial institutions, the programme specifically focuses on promoting green supply chain finance amongst SME suppliers. One such example is a collaboration between the IFC and Citi, targeting Mexican SMEs with a total funding of USD 2 billion. Emerging suppliers benefit from improved working capital through being able to convert their receivables into cash and financing open account transactions without the need for collateral. The programme further offers complementary non-financial advisory support to SME suppliers to enhance their ability to access financing.

International (EBRD): The Sustainable Supply Chain Solutions Framework by the EBRD is making green supply chain financing more accessible to SMEs. Through this programme, the EBRD provides risk-sharing arrangements to partnering banks that offer supply chain financing to large corporations and their SME suppliers. One notable example is a joint program with Citi, which supports the Finnish technology company Metso Outotec and its SME suppliers in Turkey. The EBRD has contributed EUR 25 million to this initiative. In addition to financing, the programme promotes sustainability through grants from the Cooperation Fund between the EBRD and Turkey. These grants reward SME suppliers that meet specific emission reduction targets, further incentivising environmental responsibility. The programme also helps SME suppliers access working capital more efficiently, enabling timely financing. Beyond financial support, it provides non-financial assistance through the Advice for Small Businesses program, which helps SMEs adhere to ESG standards and implement sustainable practices

Sources: (IFC, 2025[43]), (DBS, 2025[44]), (IFC, 2025[45]), (EBRD, 2023[46])

Performance-based financing instruments such as Energy Performance Contracts (EPCs) align payments or incentives with the actual environmental performance achieved—often measured in energy savings or emission reductions. In an EPC, a service provider (such as an energy service company) implements efficiency improvements at an SME’s facility, and the SME’s repayment or fees are determined by the verified energy savings generated. This approach removes much of the financial risk from the SME adopter of energy efficiency technologies, as the SME only pays for improvements that demonstrably reduce energy consumption and costs, ensuring that sustainability investments are directly tied to measurable outcomes.

Market-based instruments like green bonds and carbon credits leverage market mechanisms to channel investment into environmentally beneficial projects. Green bonds raise capital for sustainability-related initiatives at potentially more favourable terms, while carbon credits assign a monetary value to emission reductions, allowing SME adopters to generate revenue from lowering their carbon footprint or purchase credits to offset their emissions. Green bonds, and bonds in general, are not very commonly used by SMEs directly but these instruments can be leveraged by public and private financial institutions, including multilateral development banks, to raise dedicated capital from investors for financing SMEs’ green transition, which can then be deployed via different other instruments highlighted here. For example, the World Bank Green Bond programme raises funds from fixed income investors to enable additional lending for green SME projects. Since its inception in 2008, over USD 19 billion equivalent have been raised, across more than 220 bonds in 28 currencies.

4.2. Non-financial support for adopters

Non-financial support is vital for SME adopters in the green transition, as it helps them overcome knowledge gaps, build capacity, and implement sustainable practices effectively. The pairing of non-financial and financial support is relatively common. Non-financial support in particular can address some of the following barriers:

• Lack of awareness and knowledge: Many SMEs are unaware of the potential economic and environmental benefits of greening their operations, as well as the specific technologies or processes available to help them achieve sustainability goals. For instance, 63% of small businesses cite lack of skills and knowledge as a barrier to climate action (SME Climate Hub, 2023[47]). This knowledge gap prevents them from becoming adopters of greening technologies and practices. Non-financial support can help SMEs understand how sustainability aligns with cost-savings, profitability and long-term resilience. By clarifying the business case for greening, public entities can thus encourage SMEs to see these investments as opportunities rather than costs. In a study mapping capacity-building needs of SMEs to engage in climate action in the Middle East and North Africa Region, 35% of SMEs stated that training and information on climate change background are important (UNFCC, 2023[48]).

  Awareness gaps are also a major challenge for SME sustainability measurement and reporting. Some of the key challenges faced by SMEs in this space include limited understanding of sustainability concepts as well as material issues due to lack of specialised staff, limited awareness and understanding of sustainability reporting standards and limited knowledge and experience with sustainability data collection and measurements, among others. Furthermore, SMEs often also lack awareness of the benefits from sustainability reporting and see it rather as a cost or burden. Finally, even when there are tools and support available to SMEs to help with sustainability measurement and reporting, awareness and knowledge gaps can interfere in their utilisation by SMEs.

• Technical capacity gaps: Even when SMEs are aware of the benefits from investing in sustainability, they often lack the internal expertise or skills to evaluate and implement appropriate green solutions. This is especially true for micro and small enterprises with limited staff and resources. This is also a key challenge for sustainability measurement and reporting. In a 2025 global survey, 55% of SMEs reported that they would like to get policy support aimed at upskilling staff to take climate action (SME Climate Hub, 2025[49]). Public support in the form of training programs, advisory services, and access to technical experts can help SMEs build the capacity needed to adopt and effectively use relevant technologies and processes and to close capacity gaps for sustainability reporting.

• High perceived costs and uncertainty: As noted in the previous chapter, the upfront costs of adopting sustainable practices can appear prohibitive to SMEs whilst the returns on these investments may seem uncertain. About half of SMEs perceive the high cost of green technologies as the primary barrier to adopting more sustainable practices (International Chamber of Commerce, 2024[50]). Non-financial support can reduce these perceived barriers by providing relevant information including cost-benefit analyses, audits, and case studies or fora for knowledge exchange where SMEs can learn about the financial and environmental payoffs of adoption.

• Administrative and regulatory complexity: SMEs also face challenges in navigating the complex landscape of environmental regulations, certifications, and reporting requirements, with the complexity of administrative procedures cited among the key barriers to adopting green practices (European Commission, 2024[4]).. Public institutions can simplify this process by providing advisory services, clear guidelines, and easy-to-use compliance tools. These resources can help SMEs understand their obligations and reduce the administrative burden of meeting these obligations.

• Limited access to markets and networks: SMEs may lack the connections needed to integrate into green supply chains or access sustainable markets. They may struggle, for example, to identify reliable technology providers, financial partners, or customers seeking sustainable products and services. Public initiatives like matchmaking platforms and trade fairs can help SMEs establish these critical connections.

Table 4.2. Common non-financial support programmes for SME adopters

Support programme	Description	Examples
Awareness campaigns and training programmes	Workshops, seminars and training sessions to help SMEs understand the benefits of greening and aid in implementing sustainability management practices	Tools to assess and measure their sustainability performance Sustainability assessment services which enable SMEs to identify gaps in their sustainability management Educational sessions on the economic benefits of implementing sustainability measures
Technical assistance programmes	Hands on assistance through assessments and consulting services on technical aspects of greening	Conducting environmental impact assessments or energy audits Quantification tools to measure carbon footprint
Standards and certification support	Guidance and simplification of process to obtain certifications and standards in the form of advisory services, workshops and resources	Subsidised certification programmes Simplified documentation requirements Tools which measure eligibility for obtaining certifications
Sustainability reporting tools	Tools which enable SMEs to measure their sustainability performance and facilitate their reporting	Automated data reporting tools Data aggregators and portals

Public entities can address these challenges and externalities by offering relevant informational, technical and capacity building support. Common vehicles for the provision of such support include:

Awareness campaigns and training programmes. Awareness campaigns and training programs play a critical role in helping SME adopters understand the benefits of demonstrating their sustainability performance, transitioning to greener practices and the specific steps required to achieve sustainability goals. Public and private organisations can conduct trainings, workshops and seminars, tailored to SMEs on topics such as energy efficiency, waste reduction, and sustainable supply chain practices. These initiatives not only raise awareness of environmental and financial benefits but also build the skills needed to implement green technologies and processes effectively. In Chile, for example, BancoEstado offers greening support to SMEs through guides and training services, as well as matchmaking services, directing SMEs to relevant financial support avenues (see Box 4.6). Singaporean SMEs can access capacity-building services through the ESG Ready Programme, offering tailored support across five pillars, depending on the ESG readiness level of the SME (see case study on Singapore in Annex A).

Box 4.6. Examples of awareness campaigns and training programmes for SME adopters

Chile: The public development bank BancoEstado has introduced the Green World Programme, designed to empower SMEs in adopting sustainable practices. The programme provides guidance on the benefits and costs of implementing green technologies. Additionally, it facilitates connections with partner support programmes to help SMEs implement sustainability projects, showcasing available financial support instruments.

Sweden: The public development bank Almi offers comprehensive sustainability support to SMEs through guidance, training, and capacity-building initiatives. The bank organises workshops and programmes aimed at enhancing SMEs’ knowledge and expertise in sustainability practices. Additionally, Almi provides a sustainability assessment service, helping businesses identify areas for improvement and develop strategies to enhance their environmental performance.

Singapore: DBS Bank, in partnership with the government agency Enterprise Singapore, has launched the ‘ESG Ready Programme’ to equip SMEs with the tools and knowledge needed to strengthen their sustainability capabilities. The programme offers training, advisory services, and tailored support across five pillars to help SMEs understand and adopt environmental, social, and governance (ESG) practices. It focuses on guiding SMEs in developing and implementing effective sustainability strategies, as well as providing access to DBS' comprehensive suite of sustainable financing solutions. The complementary Sustainability Accelerator Tool enables SMEs to assess their current level of sustainability, providing them with recommendations on which pillar to engage in.

Sources: (Banco Estado, 2024[51]), (almi, 2025[52]), (DBS, 2025[53])

Technical assistance. Technical assistance provides hands-on, expert support to SME adopters, helping them navigate the complexities of transitioning to greener operations. This could include advice on selecting and implementing energy-efficient equipment, redesigning production processes to reduce waste, or integrating renewable energy solutions into their operations. This can also provide support. Technical advisors can also assist SMEs in conducting environmental impact assessments or creating customised sustainability roadmaps. Such assistance ensures that SMEs not only adopt sustainable practices but do so in a cost-effective and impactful manner, minimising risks and maximising long-term benefits. Box 4.7 outlines examples of technical assistance programmes. Indian SMEs can participate in the Green Pathways E-Series, to gain access to reports, case studies and tools to support their greening initiatives. Similarly, SMEs in Japan can benefit from consulting services provided by the Shoko Chukin Bank to assist them in their decarbonisation efforts (see case study on Japan in Annex A).

Box 4.7. Examples of technical assistance programmes for SME adopters

Technical assistance

Australia: SMEs in Canberra can participate in the government’s Sustainable Business Program to receive technical advice across four areas, including energy, transport, waste and water. Under the programme, SMEs can receive a free on-site assessment from technical experts and unlock access to funding options.

India: The Small Industries Development Bank of India (SIDB) is supporting SMEs with sustainability through its Green Pathways E-Series, a thematic knowledge initiative designed to guide SMEs on specific low‑carbon paths. It offers an expansive suite of knowledge products: expert commentaries, thematic reports, practical case studies, and toolkits for de‑risking finance in areas like solar, EVs, energy efficiency, and circular-economy adoption. Collectively, these resources help SMEs navigate financing and implementation of sustainable solutions.

Japan: the state-owned SME development bank Shoko Chukin Bank provides decarbonisation management consulting services to its SME clients. This includes capacity-building support, such as calculating and visualising emissions and formulating emission reduction targets. The service also offers technical assistance for developing transition plans, to obtain certifications such as the Science Based Targets Initiative (SBTI). A business matching service is also included in the programme, through for example connecting SMEs with relevant renewable energy generation partners.

Morocco: The EBRD offers capacity building support to Moroccan SMEs involved in developing and deploying green technologies through its Green Economy Financing Facility. The Green Technology Selector is an online tool helping SMEs identify which green technologies are eligible for financing. Expert advice is provided by external consultants on identifying additional investment opportunities and evaluating the effectiveness and sustainability of proposed solutions.

Europe: The SME Green Skills HUB, a project which was co-funded by the European Commission, offers training modules to SMEs for integrating the Sustainable Development Goals (SDGs) into their business models and operations. The platform connects trainers and mentors with SMEs, offering a framework with a standardised methodology to trainers to ensure consistency across implementation. SMEs can access a tool which assesses their competences on SDG implementation, as well as guidelines and best practices.

International: The ASEM SMEs Eco Innovation Center (ASEIC) provides technical support to SMEs on achieving carbon neutrality. Specifically, it supports SMEs in supply chains to manage their greenhouse gas emissions through guidelines and a quantification tool. Additionally, it aids SMEs to establish and implement greenhouse gas reduction goals through consulting programmes in collaboration with local partner companies.

International: The Green Industry Platform, under the United Nations Industrial Development Organization (UNIDO) and the Green Growth Knowledge Partnership (GGKP) have jointly developed the I-GO Assistant, helping SMEs identify opportunities to enhance sustainability within their operations. This tool enables SMEs to self-assess their current resource efficiency and circular economy status. The SME then receives tailored recommendations based on their results, and access to relevant support services to further implement sustainability improvements.

International: The SME Climate Hub provides measurement tools that help SMEs calculate their carbon footprint. In partnership with Equipoise and Emitwise, SMEs can choose between a comprehensive carbon calculator, which quantifies emissions across Scope 1, 2, and 3, and a supply chain calculator, which focuses specifically on Scope 3 emissions within an SME’s supply chain.

Conducting energy audits

The National Development Bank of Czechia (NRB) is providing technical assistance to SMEs for implementing energy-saving projects in buildings through the New ELENA programme. This initiative supports SMEs in adopting measures such as insulation, window replacements, and cooling system upgrades, among others, to improve energy efficiency and reduce emissions. The programme covers up to 90% of project preparation costs, including feasibility studies, energy audits, and investment planning, leaving SMEs responsible for only 10% of the remaining costs. The previous ELENA project in Czechia led to 40 GWh of energy savings and a 24,000-tonne reduction in CO₂ emissions. The project is co-financed by the EU’s InvestEU Advisory Hub.

Ireland: The Sustainable Energy Authority of Ireland provides support to SMEs on conducting energy audits through the Support Scheme for Energy Audits (SSEA). This scheme provides a voucher with expert advice on how to improve and implement energy efficiency measures.

UK: The Department for Business and Trade is offering expert advice on energy efficiency through its SME Energy Efficiency Scheme (SMEES). The programme combines a grant with technical support on conduct energy audits and identifying ways to save energy. Resources include online tools and workshops.

Sources: (ACT Government, 2021[54]), (I-GO, 2025[55]), (ASEIC, 2025[56]), (SME Climate Hub, 2025[57]), (Shoko Chukin Bank, 2024[58]), (NRB, 2024[59]), (SEAI, 2025[60]), (UK Government, 2022[61]), (SME Green Skills Hub, 2025[62]), (EBRD, 2025[63]), (SIDBI, 2025[64]).

Support with standards and certifications. Attaining sustainability standards and certifications can be a significant barrier for SME adopters due to limited resources or expertise. Public and private entities can provide support by offering subsidised certification programs, guiding SMEs through the compliance process, or simplifying the documentation requirements. Certifications such as ISO 14001 or energy efficiency labels help SMEs gain credibility, access new markets, and align with larger buyers' sustainability requirements. Supporting SMEs in meeting these standards helps them gain access to and remain competitive in green supply chains and contribute to broader environmental goals. Canadian SMEs can receive support services from the Business Development Bank of Canada in obtaining a B-Corp certification (see Box 4.8).

Box 4.8. Examples of support with standards and certifications, knowledge sharing networks and peer learning

Belgium: Cluster Tweed, supported by the regional government of Wallonia, helps to connect businesses, research institutions, and public authorities to foster collaboration and innovation in green technologies. The cluster provides SMEs with access to technical expertise, funding opportunities, and collaborative projects that help them develop and scale up environmentally friendly products and sustainable solutions. It also offers networking opportunities, market access, and helps SMEs find partners and customers in the green sector.

Canada: The Business Development Bank of Canada (BDC) offers technical assistance to help SMEs obtain a B-Corp certification, with a benchmark tool on B-Corp eligibility that firms can use to gauge their alignment to social/environmental objectives.

Netherlands: the Versnellingshuis Circulaire Economie (Acceleration House for the Circular Economy) is an initiative from the Dutch Enterprise Agency (RVO). The knowledge hub focuses on accelerating the transition to a circular economy by supporting SMEs and entrepreneurs in their efforts to reduce waste, increase resource efficiency, and adopt circular models. It provides advice, networking, and collaboration opportunities, as well as connecting businesses with public and private partners to help them scale circular economy solutions.

Europe: The European Cluster Collaboration Platform offers a comprehensive knowledge-sharing hub through its Green Cluster Collaboration initiative. This platform connects SMEs, clusters, and business networks across Europe to foster collaboration, innovation, and the development of sustainable solutions. By facilitating the exchange of tools, best practices, and insights, the hub enables SMEs to advance their greening efforts and transition to more sustainable business models. The platform also provides SMEs with access to funding opportunities, expertise, and strategic partnerships, empowering them to develop and scale eco-friendly products and services.

Sources: (European Cluster Collaboration Platform, 2025[65]), (Wallonie, 2025[66]), (BDC, 2025[67]), (RVO, 2024[68])

Knowledge-sharing networks and peer learning. Knowledge-sharing networks and peer learning platforms create opportunities for SME adopters to learn from each other’s experiences and best practices in sustainability. These networks can be organised as online forums, industry associations, or regional workshops, enabling SMEs to exchange insights on challenges, solutions, and innovations. By connecting SMEs with similar goals and challenges, these networks accelerate the diffusion of sustainable practices and create a supportive ecosystem for ongoing improvement. Some examples are outlined in Box 4.8. Dutch SMEs who are developing circular economy models can access networking opportunities and matchmaking services to explore collaboration opportunities through an initiative launched by the Dutch Enterprise Agency.

Sustainability reporting. Non-financial support spanning the different categories above is being increasingly offered to SMEs to address the challenge of sustainability performance measurement and reporting which are critical for accessing green and sustainable finance (OECD, 2025[69]). Some critical areas of support include: provision of calculators and tools that can aid SMEs in calculating their carbon footprint or measure other types of sustainability-related metrics that they need to report on; offering standardised reporting templates; provision of relevant institutional and other infrastructure that can facilitate automated data sharing to reduce SMEs’ reporting burden; creation of data aggregator and reporting portals that can help SMEs generate sustainability reports that can be shared with many different stakeholders (see Box 4.9). The Danish Business Authority has launched a pilot which aims to automate sustainability reporting practices for SMEs across Europe, significantly reducing administrative burdens (see case study on Automating Sustainability Reporting in Annex A). Capital Markets Malaysia has developed standardised ESG reporting templates, offering step-by-step guidance on sustainability reporting for SMEs across the ASEAN region (see case study from Capital Markets Malaysia in Annex A).

Box 4.9. Tools and support for SME sustainability reporting

Calculators for SME reporting

Denmark: The Danish Business Authority in collaboration with the Danish Energy Agency have launched a digital carbon footprint calculator (the Climate Compass), which is targeted at SMEs. With the Climate Compass, SMEs can access a free, authoritative tool to calculate their emissions in compliance with the GHG-protocol that is continuously updated by the Danish authorities with the newest available data. Additionally, the Climate Compass enables companies to forecast their emissions over a ten-year period and offers guidance in setting emission reduction targets that are in line with the Science Based Targets Initiative (SBTi) and the Paris Agreement.

France: Bpifrance and the French Agency for Ecological Transition (ADEME) provide a so-called “climatometer,” a free tool which allows SMEs to calculate their environmental footprint. SMEs obtain an individual diagnosis assessing climate impacts and recommendations for climate actions they can take.

Industry-led initiatives in venture capital, such as Invest Europe, ESG_VC and VentureESG highlight an increasing trend of sustainable investing in venture capital. These programs provide advanced frameworks for investors to assess and manage financed emissions, helping to integrate environmental, social, and governance (ESG) considerations into investment decisions. For SMEs and start-ups, these initiatives offer critical access to capital for developing green technologies. ESG_VC, for example, assists start-ups in tracking and improving their ESG performance by providing a free benchmarking tool and hosting training sessions to share best practices. Invest Europe published an updated reporting template in 2024 for private equity and venture capital general and limited partners to incorporate ESG considerations into their operations. The template is aligned with regulatory reporting requirements in the EU and uses a proportional approach, adapting reporting across three stages (minimum, recommended and full reporting), depending on the maturity level of the portfolio companies.

The SME Climate Hub offers practical tools for SMEs such as a Business Carbon Calculator as well as educational resources on creating credible transition plans and accessing sustainable finance. The SME Climate Hub recently launched a web-based reporting tool that facilitates climate-related data reporting by SMEs. The reporting tool is aligned with the Carbon Disclosure Project (CDP) and has three main components: reporting on annual GHG emissions, listing actions taken to reduce business and value chain emissions, and monitoring on progress achieved. The SME Climate Hub partners with governments to tailor its products to specific markets and organise awareness raising campaigns. It has done this in a few G20 countries including India, the UK and the US. It has also launched regional campaigns in the Latin America and Caribbean region as well as Middle East and North Africa.

Automating and streamlining data reporting

Denmark: The Danish Business Authority is currently implementing a project on Automated Sustainability Reporting that aims to automate key company processes related to data collection and management, sharing of sustainability-related information, as well as the digitalisation of businesses' sustainability reporting. This initiative is piloting several key components, including the establishment of a common infrastructure for open data exchange, the development of standardised digital data formats (such as those for the VSME and GHG emissions), and the creation of a standardised data model. This model will be tested and used by private sector actors to streamline sustainability accounting processes. Additionally, Denmark has begun collaborating with other Nordic countries to advance the adoption of automated sustainability reporting across the region.

Germany: The German Sustainability Code was developed as a digital tool in 2011, providing companies with a standard to report their sustainability performance. It acts as a management tool, enabling companies to identify material matters as well as developing sustainability strategies and actions. Its digital dimension enables companies to communicate their sustainability performance to their key stakeholders in an accessible way. The tool is free of charge and currently in the process of being updated by the Federal Ministry for Economic Affairs and Climate Action to align itself with CSRD. A modular approach will be adopted, providing reporting support to both entities who are required to report under the CSRD and those voluntarily reporting. This will include translating CSRD requirements into simple language and offering free training courses and information services on CSRD reporting to companies, including SMEs.

Singapore: The Monetary Authority of Singapore (MAS) developed Project Greenprint, a public/private partnership to develop a technology platform that streamlines the collection, access, and use of climate and sustainability data. MAS has also partnered with the United Nations Development Programme (UNDP) and the Global Legal Entity Identifier Foundation (GLEIF) to develop digital sustainability credentials for SMEs and to simplify the ESG reporting process for MSMEs to generate ESG data credentials that can be housed in MSMEs’ Legal Entity Identifier (LEI) records. The initiative is currently piloting the inclusion of Scope 1 and Scope 2 emissions data in LEIs.

The Nordics: The Nordic Accountant Federation (NAF) created in 2021 a simplified sustainability reporting framework tailored to SMEs, the Nordic Sustainability Reporting Standard. The framework was a streamlined version of the GRI reporting standards for large entities, covering all three ESG dimensions. The initiative has since evolved to fully align itself with the previous VSME exposure draft framework of January 2024. With this alignment, the NSRS has transitioned from being a standalone reporting standard to a tool and guidance framework, aligning with its objective of supporting the development of one common European standard. The tool consists of a streamlined reporting template that SMEs can use to comply with the VSME.

UK: Alongside a coalition of public and private stakeholders, the British Business Bank is supporting the implementation of Project Perseus, an initiative that is piloting a solution enabling the direct provision of data on SMEs’ electricity consumption from utilities to financial institutions with SMEs’ consent. The pilot architecture developed by this project uses smart meter data to simplify Scope 2 reporting for enterprises by enabling the sharing of these data from energy providers to financial institutions and other relevant stakeholders, with the consent of the enterprise. The solution will be piloted with several financial institutions within a sandbox setting in the early part of 2025.

ASEAN: Capital Markets Malaysia, an affiliate of the Securities Commission Malaysia, has developed the Simplified ESG Disclosure Guide for SMEs that are part of international supply chains. The guide offers SMEs a streamlined reporting template in the form of an Excel sheet, which is user-friendly and enables easy data entry that can then be passed onto relevant partners. It provides further sector-specific reporting guidance with additional datapoints. The support tools are provided in multiple languages to increase accessibility. Guides are available for SMEs in Malaysia and across the ASEAN region.

Aggregating data for easier reporting

France: The Ministry of the Economy and Finance of France and the digital services incubator (beta.gouv) developed the RSE Portal, which provides businesses with a streamlined process to understand and comply with their Corporate Social Responsibility (CSR) and ESG obligations. Upon registration, businesses gain access to a personalised dashboard where they can further refine their criteria and manage their obligations effectively. Businesses can also use the Portal to conduct the so called BDESE (Economic, Social and Environmental Database) reporting, whereby they can fill out relevant forms and be directed to appropriate reporting platforms (e.g. Egapro index, transition plans, etc.).

Greece: The Hellenic Development Bank has recently launched their ESG Tracker, an online platform that captures the progress of businesses in meeting ESG criteria. The programme is freely accessible and provides firms with a real-time self-assessment and a tool to report on their sustainability progress. The platform aligns itself with international indicators from the Global Reporting Initiative, the Sustainability Accounting Standards Board, the Task Force on Climate Related Disclosures, and the Carbon Disclosure Project as well as national standards used by the Athens Stock Exchange.

Streamlining SME sustainability reporting

International: The OECD Platform on Financing SMEs for Sustainability is advancing efforts on fostering convergence in SME sustainability reporting. By mobilising key stakeholders, including financial institutions, standard setters and SME representatives, it is working to foster convergence in SME sustainability reporting across jurisdictions. The OECD has issued a Guidance Note on fostering convergence in SME sustainability reporting, providing a core set of sustainability indicators and metrics for the development of SME sustainability reporting frameworks, as well practical guidance on how to develop and implement such frameworks (Kuzmanovic, Koreen and Honegger, 2025[2]).This initiative seeks to streamline the reporting process across jurisdictions, enabling better alignment and greater transparency in sustainability practices among SMEs.

Sources: (OECD, 2025[69]), (Klimakompasset, 2025[70]), (Bpifrance, 2025[71]), (Invest Europe, 2025[72]), (ESG_VC, 2025[73]), (VentureESG, 2025[74]), (SME Climate Hub, 2025[75]), (Deutscher Nachhaltigkeits Kodex, 2025[76]), (MAS, 2021[77]), (NSRS, 2025[78]), (Icebreaker One, 2025[79]), (Gouvernement francais, 2025[80]), (HDB, 2025[81]), (SEDG, 2025[82])

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Notes

← 1.  As noted in Chapter 1, tax incentives are not included in the in-depth analysis of this report as the focus is on instruments and programmes that are usually implemented by public financial institutions or equivalent actors.

← 2.  EBRD is an international financial institution that supports the development of market-oriented economies and private enterprise across Central and Eastern Europe, Central Asia, the Southern and Eastern Mediterranean, and some parts of Sub-Saharan Africa, focusing on sustainable and inclusive growth.