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Helping smaller enterprises be green with finance

China Daily | Updated: 2022-03-29 07:48
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An employee of an engine manufacturer works on a production line in Tangshan, Hebei province, in September. [Photo provided to China Daily]

Small and micro enterprises are the mainstay of the economy, and the government has made their stability and financial sustainability a priority. But smaller businesses are not always green. Finance is a way to guide small and micro enterprises toward greener business models.

However, green finance at present mainly focuses on the construction of large-scale green energy, green transportation and green building projects. Due to the characteristics of such projects, the main body of these green projects are generally large and medium-sized enterprises. There are many central and State-owned enterprises, and there are also some large private enterprises, but the participation of small and micro enterprises is relatively limited.

Standards, certification, a disclosure system, and incentives are required for small and micro enterprises to ensure that green finance is inclusive and inclusive finance is green.

Green standards and certification need to be established for small and micro enterprises. These need to be operable from the perspective of financial institutions, and should not be too complicated and the cost should not be too high.

Also, the financial agencies should develop some green financial products and services for small and micro enterprises to give a bigger boost to their green development. An information disclosure system on green development should be established to tell the market, financial institutions and the public that an enterprise is indeed green and is able to record and report environmental benefits. The specific requirements and calculation methods of these disclosures and how to implement them require a set of methods that can be applied to small and micro businesses, agriculture and consumption.

The government also needs to consider how to increase policy incentives to make its inclusive finance greener and its green finance more inclusive.

Enabling the small market players to benefit from its green finance system can give a big boost to the country in realizing the target of peaking its carbon emissions before 2030 and neutralizing its emissions before 2060.

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