Climate resilience, resource efficiency and circular economy Support to SMEs in international value chains By Annegret Brauss 11 June, 2019
2 ITC helps businesses do good trade ITC is dedicated to support the competitiveness and internationalization of small and medium-sized enterprises (SMEs) in developing countries – as a vehicle for broad-based sustainable development. ITC works concurrently at different levels: - SMEs - Trade and Investment Support Institutions (TISIs) and the institutional ecosystem - Policy makers & public-private dialogue - Market partners (e.g., financiers, buyers, aggregators, technology providers, etc.) Addressing competitiveness from a Connect, Compete and Change angle
3 Vision: SME growth = green growth Mutually positive relationships can enhance enterprise competitiveness • Companies and the • Companies use natural environment are in a constant resources exchange, which can be • Some might produce mutually supportive or emissions or pollute detrimental • Environmental sustainability of SMEs has become a key requirement from international buyers, consumers and other business ecosystem partners • Environment ITC provides services aiming Companies to increase SME • Environment provides natural competitiveness through resources enhanced interaction with the • Environment can impact natural environment, such as enterprises through change or resource efficiency, circular other related impacts production or climate change adaptation
4 Mainstreaming Sustainable & Inclusive Development at ITC • ITC is currently establishing guidelines to support the mainstreaming of inclusive, green and responsible trade into all ITC projects • Principles & guiding questions for projects in design phase, as well as for implementation and evaluation • Training for project managers • Processes & indicators to enforce mainstreaming • Guide to be launched in Q3
5 Promoting Green Growth through SMEs 1 2 Climate Expert Approach Resource Efficiency & Circular Production Climate change adaptation Climate mitigation, reduced pollution, circularity Similar methodology for both approaches: • Direct work with SMEs follows a 4 steps approach: Assessment (risks or Compare Identify measures Create strategy efficiencies) measures • Connecting SMEs with business ecosystem stakeholders to enable the implementation of the strategies (e.g., financiers, technology providers, etc.)
6 Both approaches offer direct support for SMEs Self-assessments • Companies to complete an initial survey about their current practices • Survey results to be used as baseline assessment of each company and to identify most important areas for action Personalized face-to-face coaching sessions • Expert coach to work directly with respective SME • Preparation of business cases for each green project to access finance Group trainings based on needs assessment • Topics defined based on needs assessed resulting from direct communications with beneficiary SMEs Online Trainings for SMEs • Training on for SMEs going step by step through each approach • To be hosted on ITC’s SME Trade Academy: https://learning.intracen.org/
7 Mainstreaming of the Climate Expert Approach
8 Methodology Study on the climate Customized coaching programme Implementation of impact on the targeted of 6 to 8 months combined climate adaptation measures value chain with specialized workshops and e-learning course
9 Advantages for SMEs SMEs/coperatives design a climate change adaptation strategy in order to: • Ensure continuity of business by taking measures against negative effects of climate change, • Strenghten competitive advantage by investing in innovating measures and increasing production efficiency, • Lower operation costs by using available ressources more efficiently, • Improve companies ’ reputation to climate change issues, • Anticipate new regulations in relation to climate change. • Develop new range of products and services meeting new needs created by climate change,
10 Examples of adaptation measures • Increasing height of goods stored in warehouse to avoid damage during floodings • Change of working hours during heat waves, extreme weather events, floodings • Installation of ventilators and insulation of factory building to lower temperatures during heat waves and ensure productivity levels • Solar panels and energy storage to ensure energy supply during extreme weather events (heavy rainfalls and storms) or to substitute wood-based tea drying • Set-up of parabolic drying beds that facilitate the coffee drying process
11 Common challenges to overcome Awareness raising: - Skepticism: General skepticism from local companies - No awareness: A lack of awareness and understanding on climate risks and the linkage with business operations Coaching programme: - Conflicting priorities and time pressure of the SME beneficiaries - Change in focal points assigned to project - Uncertainty in the assessment of adaptation measures: - Lack of information, especially localized climate information, technologies, funding opportunities - Lack of willingness of beneficiary SME to share financial data Implementation of identified adaptation measures: - A tendency to focus on short-term decisions and resistance to change existing processes
12 First lessons learnt • Urgent need for SMEs to build capacity & skills to actively manage climate induced risks and strengthen financial literacy • Responsiveness to climate risk management highly dependent on targeted value chains : agriculture versus manufacturing • Positive impact of building private sector alliances on non-commercial issues • Gap in the offering of TISIs which is traditionally less focused on sustainability and climate change
13 Projects on Resource Efficient & Circular Production Processes (2019-2022) GTEX/ MENATEX • Donor: Sweden and Switzerland • Sector: Clothing • Countries: Egypt, Jordan, Morocco, Tunisia T4SD Hubs • Donor: Sweden • Sector: Multiple (e.g., shea, horticulture) • Countries: Ghana, Kenya, Peru, Viet Nam Ethiopian Textiles Sector • Donor: BMZ/GIZ • Sector: Clothing RECP projects are confirmed to be • Country: Ethiopia implemented in 13 countries with 15-20 SMEs MARKUP in each country in starting in 2019/2020 • Donor: EU • Sector: Tea and coffee • Countries: Burundi, Kenya, Tanzania, Uganda
14 Methodology – RECP Approach Setting a Customized coaching programme Implementation of benchmark for of 6 to 8 months combined RECP measures resource efficiency with specialized workshops and and best practices e-learning course in circular production
15 Making the business case for climate action Importance of creating a business case and direct linkage to financing options • Access to Finance is the most important aspect to implement larger adaptation measures (Not necessarily only Green Finance) • Coherence with requirements of finance providers (e.g., banks, impact investors) • Cost/Benefit Analysis based on NPV calculation is key as a basis for investment decisions • Capacity of SMEs to communicate results to internal and external stakeholders
16 Thank you! Annegret Brauss Associate Expert abrauss@intracen.org
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