Fabian Demicoli

Green economy: SMEs needs the right partners and the right rules

The "green economy" is a significant business opportunity for SMEs, but they require reliable partners in financing their investments and the right legislative framework. This was the message brought forward at the European conference "How green makes money", which took place in Brussels earlier this month to which GRTU President Paul Abela and Director General Vincent Farrugia attended. The conference featured President Herman Van Rompuy, Minister Vincent Van Quickenborne as well as economists Jeremy Rifkin and Geert Noels. The event was organised by the Belgian Presidency of the EU and the European Commission in association with UEAPME and its Belgian members UNIZO and UCM.

 

The ambitious goals set by the EU to reduce greenhouse gas emissions while increasing the use of renewable resources and improving energy efficiency will not be reached without the contribution of European crafts and SMEs. Some companies are already on the right track in this respect and are making profits in the process. However, many SMEs have difficulties in finding partners to finance their „green‟ projects, while others are held back by red tape and complicated procedures.

 The vast majority of SMEs will require more attention if we want the „green economy‟ to expand beyond niche markets in the months and years to come.

Many SMEs are willing to invest in more energy-efficient systems and environmentally-friendly production processes. However, they often face obstacles in getting access to finance, with banks being reluctant to fund such investments and lacking the specialised staff needed to evaluate SME projects. Bank staff should be trained to objectively assess SMEs' investments projects and more awareness raising initiatives are needed.

The existing financing opportunities created by the EU, the EIB and the EIF are a good starting point, however, funding and granting mechanisms must be simplified. Moreover, these schemes must be made more attractive for decentralised financial intermediaries, which are the backbone of SME finance in many countries. Structural funds can and should also be used to promote investments in the green economy, although their potential has remained largely un-tapped so far due to difficult procedures and requirements. It is also necessary to foster alternative sources of funding for SMEs, such as risk capital, and to reinforce the use of guarantee schemes.

On the regulatory framework, the EU policy action in the field should be based on the Small Business Act and on the principles of subsidiarity, better regulation and "Think Small First". If legislation triggers deep and structural impacts on SMEs, specific measures such as guidelines, thresholds, longer and/or staged implementation periods, technical assistance and simplified procedures must be foreseen to avoid companies being placed out of the market.

In the next years, Europe will have to switch to a more resource efficient economy. Small entrepreneurs are willing to do their part and have fully understood that the „green economy‟ is an opportunity and not a threat.

However, SMEs need the right partners and the right rules to succeed, and they expect progress on both aspects.

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