Micro, small and medium-sized enterprises (MSMEs) are central to the global green transition. Representing over 90 per cent of businesses worldwide, they are deeply embedded in local economies and play a critical role in economic growth and job creation, particularly in rural and semi-urban communities. As countries accelerate efforts to reduce emissions, build climate resilience and shift towards more sustainable production and consumption, MSMEs will ultimately determine whether this transition reaches scale and delivers inclusive outcomes.

For MSMEs themselves, adopting green practices is increasingly a matter of competitiveness and long-term viability. Sustainable production methods, resource efficiency, environmental compliance and sustainability reporting are becoming core requirements for accessing markets, finance and global value chains. Yet despite their importance, many MSMEs struggle to translate sustainability ambitions into practice. 

Across the Asia-Pacific region and Mesoamerica, MSMEs face shared barriers to green transition, including limited access to finance, technical capacity gaps and weak enabling policy environments. These shared challenges underscore the relevance of examining policy responses from different regional contexts.

Access to finance remains one of the most significant barriers to MSME participation in the green transition. Investments in environmental upgrades often require high upfront capital that small firms cannot easily mobilise. Financial institutions may also perceive MSMEs as high-risk borrowers due to limited collateral, incomplete financial records and uncertainty around returns from green investments.

Several countries have begun addressing this gap through targeted financial mechanisms. In Thailand, the Bio-Circular-Green (BCG) loan programme supports SMEs’ green transition by offering financial support for investments in renewable energy and energy-efficient technologies. The programme combines financial support with training to strengthen financial literacy among SMEs and provides access to professional consulting services. Similarly, in Mesoamerica, Colombia’s Línea de Crédito Adelante Sostenible (Sustainable Growth Credit Line) programme provides preferential credit for investments in sustainability, productivity improvement and innovation, with a particular focus on microenterprises, women-led businesses and MSMEs in rural, post-conflict and geographically disadvantaged areas facing structural barriers to finance and markets.

Beyond finance, many MSMEs struggle with the “how” of greening their business operations. MSMEs often lack the technical skills, data, and tools needed to assess environmental impacts, implement improvements, or meet sustainability and reporting requirements. This challenge is particularly acute for microenterprises and firms operating outside major urban centres. In response, practical and accessible policy initiatives are emerging to reduce the financial and operational burden on MSMEs.

In Malaysia, SME Corporation Malaysia has developed an ESG self-assessment tool and Quick Guide to help MSMEs initiate their sustainability journey. These tools simplify complex concepts and enable enterprises to evaluate their ESG readiness and resource consumption, identify priority areas for improvement and integrate ESG practices by providing step-by-step guidance. In Costa Rica, the Códigos Verdes (Green Codes) similarly helps MSMEs understand and apply environmental standards and ESG requirements by acting as an entry point to improve compliance and market access. Through participatory ESG diagnostics, sustainability roadmaps and supplier engagement tools, the multi-stakeholder initiative supports MSMEs in transitioning towards greener operations.

Even where finance and practical tools are available, policy fragmentation and regulatory environments can undermine MSMEs’ engagement in the green transition. National sustainability strategies and frameworks may exist, yet they often remain disconnected from the operational realities of small businesses or lack clear mechanisms to translate objectives into practice. Strengthening cross-ministerial coordination, together with tailored regulatory and financial instruments, is essential to reducing uncertainty and accelerating local uptake. 

One example of how MSME support can be delivered through tailored programmes within a coordinated, multi-level arrangement is found in Malaysia. Through the Low Carbon Transition Facility, Malaysia supports a broad range of SMEs in adopting low-carbon and sustainable business practices, while the High Tech and Green Facility focuses on SMEs in high-tech and green sectors. Both initiatives are led by the Central Bank of Malaysia and implemented in collaboration with SME Bank Malaysia, a development financial institution fully owned by the Ministry of Finance and mandated to serve SMEs. 

In Mesoamerica, Guatemala has similarly embedded implementation mechanisms within its Government Plan 2024-2028 through the Programa de Incentivos Forestales y Apoyo (Forest Credit and Agroforestry Support Ecosystem), as part of its broader forest incentive programme. The programme links MSMEs in forestry and agroforestry value chains to ecosystem restoration and biodiversity protection by combining financial incentives with technical support, including specialised credit and climate-risk insurance delivered through regional savings and credit cooperatives. These cooperatives channel loans and provide technical assistance to smallholders and community enterprises, particularly in rural and Indigenous areas.

While these examples are rooted in national contexts, the challenges they address are widely shared across the Asia-Pacific region and Mesoamerica, creating opportunities for South-South exchange and cross-regional learning. Initiatives, such as ESCAP’s partnership with APC Colombia, can facilitate such exchanges to strengthen enabling environments for MSMEs’ green transition across regions.

The insights and examples highlighted here are explored in greater depth in two recent ESCAP publications: Advancing the Green Transition of SMEs: Insights for SME Development Agencies, and Fostering an Inclusive Green Transition of MSMEs: Insights from Programmes in Mesoamerica.