• ICC, Sage Report: Only 2.8% of SMEs have accessed green finance, leaving a $789 billion opportunity untapped.
• Simplifying sustainability reporting can unlock significant funding and accelerate climate action among SMEs.
• SMEs with sustainable finance are 2.5 times more likely to implement major sustainability initiatives.

The International Chamber of Commerce (ICC) and Sage have released a global report unveiling a $789 billion green finance opportunity for small and medium-sized enterprises (SMEs). Despite this vast potential, a significant gap exists between SMEs’ sustainability ambitions and their ability to secure funding for green initiatives.

Why it matters: SMEs constitute over 90% of businesses worldwide and account for more than 50% of global non-household greenhouse gas emissions. Unlocking green finance for SMEs is critical to achieving global net-zero targets.

By the numbers:

• $30.3 trillion is invested in sustainable assets globally.
• 73% of financial institutions offer green finance to SMEs, yet only 2.8% have applied in the past three years.
• SMEs with access to sustainable finance are 2.5 times more likely to implement significant sustainability initiatives.
• 86% of SMEs say sustainability is crucial to their business, but only 63% are taking steps to reduce their environmental impact.

The challenge: Complex sustainability reporting requirements and high implementation costs are major barriers. While 86% of SMEs value sustainability, only 9.1% formally report on their impact. A staggering 74% cite complex reporting as a roadblock, and 68% find the cost too high.

The “virtuous circle”: The report highlights a positive feedback loop where sustainability reporting leads to access to sustainable finance, enabling further climate action. Yet, only 1.2% of SMEs are leveraging this cycle.

What they’re saying:

John W.H. Denton AO, Secretary General, ICC:

“We believe that SMEs are a crucial, and often overlooked, community in conversations about net-zero. We strongly support the report’s call for simplified, standardised sustainability reporting and the development of accessible digital tools to help them get started on their sustainability journey. Our goal is to create an enabling environment for SMEs to fully contribute to the achievement of the Paris Agreement goals and the Sustainable Development Goals.”

Surinder Sond, Executive Vice President of Sustainability and Society, Sage:

“There’s no path to net-zero without SMEs, which make up over 90% of the world’s businesses. For years, we’ve been championing the tools SMEs need to embrace sustainability. This report’s ‘virtuous circle’ offers a powerful way forward to build prosperous businesses and sustainable communities—through simplified reporting and accessible finance enabling climate action.”

Nigar Arpadarai, UN Climate Change High-Level Champion for COP29:

“As we gather in Baku for COP29, the urgency of our climate crisis has never been more apparent. Azerbaijan, as the host nation, has set an ambitious agenda that recognises the critical role of SMEs in our global fight against climate change. This report couldn’t be more timely or relevant to our discussions.”

The path forward:

To unlock the green finance opportunity for SMEs, the report recommends:

• Simplify sustainability reporting: Implement proportionate and streamlined reporting standards tailored to SMEs, reducing complexity and cost barriers.
• Expand access to digital tools: Provide SMEs with affordable, automated tools to track emissions and simplify reporting processes.
• Increase financial incentives: Offer tax credits, grants, and favourable loan terms to motivate SMEs to measure environmental impacts and invest in sustainable practices.

The role of technology: Despite concerns over the cost (73%) and complexity (66%) of sustainability reporting, 65% of SMEs believe digital tools could simplify the process and unlock green finance benefits.

The bottom line: Unlocking sustainable finance for SMEs is essential for accelerating global climate action. Simplifying reporting, leveraging technology, and providing financial incentives can bridge the gap between SMEs’ sustainability ambitions and their ability to act.

The International Chamber of Commerce (ICC) and Sage Report: Read the full report here.

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