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Promoting Born Green via Digital MSMEs
and Entrepreneurship in Global Supply Chains:
Non-Binding Policy Toolkit[1]

Sorrento, Italy, October 12, 2021
[PDF]

G20 members are deeply concerned about the impact of the COVID-19 pandemic on entrepreneurs and Micro, Small and Medium-Sized Enterprises (MSMEs). They fully recognize the critical role of MSMEs in economic and social development, the creation of employment, as well as their crucial contribution to any inclusive and sustainable recovery effort. G20 members also emphasize that trade and investment provide an important channel to boost MSMEs' growth and development and their integration into global markets.

The myriad difficulties faced by MSMEs and entrepreneurs are of a much broader nature. MSMEs face disproportional challenges in their efforts to become more competitive and more integrated into the global economy. They are particularly vulnerable to shocks, such as the COVID-19 pandemic, are disproportionately affected by the lack of resources, information and skills, including to adapt to technological changes, encounter challenges in adapting to different regulatory frameworks and new regulations, and face difficulties in joining regional and global value chains. This is particularly the case for women- owned MSMEs which often have limited access to finance and business opportunities.

In the context of the current global endeavor, the transition to a green economy as well as the technological advances of the new industrial revolution present both new challenges and strategic opportunities for MSMEs and entrepreneurs, particularly in developing countries, to participate effectively in international trade and investment and contribute to sustainable development and inclusive growth.

The strive for sustainable development, coupled with the digitalization process, can foster a new generation of MSMEs and entrepreneurs that is "born green via digital", and also support the transition of traditional ones towards more sustainable business models. The concept of "born green via digital" refers to those entrepreneurs and MSMEs that invest and trade in green products and services and integrate ESG and responsible business conduct into their business model. It encompasses not only those entrepreneurs and MSMEs that do so from the outset (born green), but also those that successfully adapt their traditional business model and production techniques by utilizing modern technologies to produce environment-neutral (or positive) goods and services for the domestic and international markets (re-born green).

Born-green MSMEs and entrepreneurs, in turn, can become key levers for building forward better in the post-pandemic era, including in the context of trade and investment. Capturing this strategic opportunity requires a supporting entrepreneurial ecosystem, as well as inclusive policies and initiatives to help entrepreneurs and MSMEs address the key emerging challenges, including those associated with the environmental and digital transformation. Such endeavor should take into account national circumstances and the three interrelated pillars of sustainable development: the economic, social and environmental dimensions.

This policy toolkit, non-binding in nature, aims to assist policymakers in this endeavour. While no one-size-fits-all solution exists, this policy toolkit provides guidance for G20 members and other countries looking to support both existing and new entrepreneurs and MSMEs in the green and digital transformation. Such a toolkit could facilitate the sharing of best practices and experiences. It could also help guide countries as they consider the package of voluntary policy measures to promote sustainable MSMEs and entrepreneurs in their participation in international trade, investment and global supply chains.

Effective policy, technical and technological support at the national level could be provided in the areas of regulatory environment, education and skills development, capacity-building, facilitation of environmentally friendly technology exchanges and innovations, commercialization, access to finance, access to information and the promotion of partnerships, among others.

[1] This policy toolkit was prepared by the Italian Presidency of the G20, in collaboration with UNCTAD, ITC, OECD, World Bank and WTO, under the Presidency's own responsibility, drawing on various inputs from the member States of the G20, including through the TIWG (2-3 March meeting). It is without prejudice to the positions of individual G20 members and the member States of the international organizations involved.

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Pillar I
Optimizing the regulatory framework

Governments seeking to establish an optimal national regulatory environment for supporting the emergence of born green via digital MSMEs and the rejuvenation of traditional ones, particularly in the trade and investment context, may consider:

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Pillar II
Enhancing entrepreneurship education and skills

Acquiring technological skills and know-how for the adoption of new digital business tools are essential to promote born green MSMEs and to enable traditional MSMEs to achieve a successful green and digital transformation. In this regard, governments may consider:

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Pillar III
Facilitating green technology exchanges and innovation

Innovation is not only a key enabler for born green via digital MSMEs, but also a core element of their business model. Policymakers can enhance innovation systems by:

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Pillar IV
Improving access to finance

As recognized in the G20High-Level Principles on SME Financing, inadequate access to finance remains one of the biggest obstacles for entrepreneurs and MSMEs, especially in developing countries. In their transition to sustainable business models, MSMEs may face additional compliance hurdles and entry costs to meet new standards, technical regulations and production processes. Governments may consider:

[2] The Sustainable Stock Exchange Initiative includes over 100 stock exchanges as its partners for promoting financing for sustainable development and sustainability reporting.

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Pillar V
Promoting partnerships and linkages

Fostering business linkages and a cross-cutting entrepreneurial culture could greatly benefit green entrepreneurs and born green via digital MSMEs. Benefits from these interactions include enhanced access to global and regional value chains, technological know-how and business processes. Governments could promote and facilitate robust partnership networks among relevant business actors by:

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Going forward

This non-binding policy toolkit can complement other relevant work and initiatives related to MSMEs underway or planned in the context of the G20, including in relation to access to finance, universal access to energy, digitalization, and skills. In this regard, the G20 Non-binding Policy Guidelines on boosting MSMEs' International Competitiveness, the G20 High-Level Policy Guidelines on Digital Financial Inclusion for Youth, Women and SMEs and the G20 High-Level Principles on SME Financing also provide blueprints for policy options.

G20 members might want to continue exchanging best practices in support of green and digital entrepreneurship for MSMEs, and to share relevant experiences, particularly in the context of international trade and investment policies and global supply chain management.

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Source: Official website of Italy's G20 Presidency


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