In thinking big, don't forget the real drivers of the economy
Policies required to help SMMEs in drive the transition to green economy
Much of the international and national work on the green economy focuses on the policy drivers for stimulating investment in green technologies, creating employment and reducing greenhouse gas emissions. But actors who can play a central role in making the green economy a reality are small, micro and medium-sized enterprises (SMMEs) because they are the engine of the global economy.
The vast majority of SMMEs follow the conventional model for businesses: they operate on the basis of a single, financial, bottom line. The greater the profit, the more successful a business is considered to be. Regulatory measures across the globe reinforce this approach.
But fortunately, there is a growing number of pioneers who look at success also in terms of the social benefits a business provides. These benefits are not just ‘jobs created’ – of course a major consideration as unemployment, especially for young people, grows alarmingly; rather they extend, for example, to community services and the forging of new cohesive social structures.
Some of these pioneers go even further, and operate on the basis of a triple bottom line: success for them means delivering social and environmental benefits from the outset, not as an add-on – they are exemplars of sustainable development and are already the ‘face’ of the green economy. For instance, in one of the world’s biodiversity hotspots, in Colombia’s Chocó region, Oro Verde, has created the basis for the world’s first local certification scheme for precious metals and has propelled a worldwide fair-trade movement around responsible small-scale mining. The programme empowers communities by helping them to protect and gain control over their land and use it sustainably; it improves working and living conditions by introducing new labour standards; it provides communities with opportunities to diversify their income; and it ensures the reafforestation of the land with indigenous plants. Unlike traditional mining, Oro Verde uses neither mercury nor cyanide in the extraction of gold and platinum, so miners and the tropical rainforest are protected.
SEED has worked with a large number of such green social enterprises in developing countries during their start-up phase. Their path to success is much more challenging than for a conventional, single bottom line, business. To establish and scale up, they need:
Financing: Microfinancing opportunities have grown a lot, but start-up enterprises still often face funding difficulties as they have little by way of track record. And even when they have gone some way towards scale up, access to funding and the financial flows from say, the carbon market, is by no means straightforward for.
Appropriate regulation and incentives: the development of standards can provide market rewards; fiscal measures can be targeted at small and micro green businesses; government procurement can stimulate innovation; and help to businesses to find opportunities in addressing challenges such as climate change can reveal innovative solutions appropriate for local problems and so aid adaptation.
- Access to technologies, skills development and training opportunities for both entrepreneurs and local communities, including the financial and business skills necessary for sustainable enterprises, all of which are often in short supply. Without these, there will not be the capacities on the ground to absorb any financial flows resulting from major funding and investment, and the transition to a green economy will not take place as fully, or as rapidly, as it might. .
There is no shortage of budding innovative entrepreneurs wanting to operate at the local level. Given the right opportunities, they can solve local problems in a truly sustainable manner, at the same time strengthening local institutions and helping to preserve local culture. But developing and putting those opportunities into place will take time. All the more is Rio+20 a trigger for governments, financial institutions, and other stakeholders to act quickly to encourage and enable social and environmental small and micro-enterprises to establish, and put in place strong mechanisms for reporting and evaluation of pro-poor and environmentally beneficial outcomes. That would indeed power the green economy at the grassroots and add significantly to the overall impact.
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