Developing MSME sustainability

While individual small businesses have rather low environmental footprints, their combined impact can exceed that of large businesses. MSMEs may produce more pollution than big businesses because of their informal nature and the resulting lack of regulations and supervision. Studies have estimated that these businesses can contribute up to 60-70 per cent of pollution levels in developing economies.275 Encouraging MSMEs to adopt green technology and other environmentally-friendly strategies is therefore essential in tackling climate change.

Developing economies would particularly benefit from adopting a greener approach, as they tend to be more vulnerable to environmental changes and also more reliant on natural resources for their development.276 Developing economies are bound to eventually emit more if they continue to adopt conventional growth patterns. Adopting a greener growth strategy could hence be beneficial to the economies themselves and to the wider global environment.277 MSMEs need to be part of that strategy.

In addition to greener growth, this part of the website also looks at social issues, in particular gender. The MSME sector is especially important for women as it offers significant job and income earning opportunities. Women-owned or -managed enterprises are still few in number. Therefore, many public policies and programmes have not explicitly promoted targeted support to them. Second, women-owned or managed MSMEs are likely to encounter multiple barriers such as unequal laws; inability to meet collateral requirements due to their lack of property ownership; harassment at public offices; and insufficient business knowledge, capacity, and financial literacy. Further, social innovations such as social entrepreneurship are opening new doors for many from marginalized populations with the help of the Internet and other technologies.

Greater attention needs to be paid to building resilience of MSMEs to cope with external shocks such as the COVID-19 pandemic, regional and national shocks brought on by erratic weather and slow onset disasters such drought, and macroeconomic turbulence. This is important not only because MSMEs provide a livelihood for a majority of poor, and especially for women-owned businesses, but also because they are storehouses of economic dynamism and critical links in supply chains.


275 Stokes, D., Chen, H., & Revell, A. (2007). Small businesses and the environment: turning over a new leaf? A Report for the Workspace Group PLC March (2007). Kingston University: Surrey UK.

276 ESCAP (2013). Green growth indicators: A practical approach for Asia and the Pacific, United Nations Publication.

277 ESCAP (2012). Low Carbon Green Growth Roadmap for Asia and the Pacific: Case Study - China’s Resource and Environment Performance Index, United Nations Publication.