ISLAMABAD: Small and medium enterprises (SMEs) in Pakistan need to undergo a green transformation to achieve environmentally, socially, and economically sustainable development, said an expert.
Dr Masood Arshad, Senior Director Footprint, WWF Pakistan, said while talking to WealthPK that a major component of Pakistan’s economic growth is SMEs. However, they also contribute to global environmental degradation.
“SMEs in developing countries like Pakistan are less likely to adopt green practices, and recently, it had been very hard to force SMEs to adopt sustainable green innovation practices because of multiple barriers associated with it e.g., lack of financial resources, weak enforcement of environmental regulations, lack of green knowledge-sharing cooperation among SMEs, and poor environmental management system in industries,” Dr Masood pointed out.
He said action is required in light of these challenges.
“In order to arrest environmental degradation, thorough research is needed to enhance environment quality, which can be improved through green innovations, especially in manufacturing industries,” he said.
“SMEs need more knowledge and access to financing so they can invest in suitable measures. Green credit guidelines are needed to make it possible for SMEs to access capital for green investments, and on the other hand, key private and public sector actors have to build the capacity to implement and monitor progress around these guidelines,” Dr Masood suggested.
He also shared that although Pakistan is not contributing much to climate change, it ranks among the top 10 most vulnerable countries and is exposed to its adverse impacts such as extreme weather events, more persistent droughts, floods, and heatwaves.
“It would be beneficial for the State Bank of Pakistan (SBP) to collaborate with Small and Medium Enterprises Development Authority (SMEDA) to develop Pakistan’s green SME sector through green financing. If this initiative is targeted towards eco-friendly startups or green SMEs, it can result in the robust growth of Pakistan’s green industries and environmental sustainability,” he added.
“Although the Government of Pakistan is trying to mitigate environmental pollution through various policies such as environmental taxes and subsidies for industries, there is also a need to focus on intangible resources to enhance environmental-friendly practices in manufacturing SMEs,” he said.
WWF-Pakistan is currently implementing over 30 projects, including work on forests, freshwater, species, marine and coastal areas, climate change, education and awareness, poverty-environment linkages, and policy research and advocacy integrating conservation with sustainable development initiatives through a holistic approach. It is working to create awareness through advocacy campaigns, seminars and activities with communities, and has been encouraging innovation by funding startups in partnership with diverse stakeholders with a focus on recycling. The organisation has also been working to gauge the scale of the problem in Pakistan, and is monitoring plastic waste in hotspots across the major cities.
In developing nations, SMEs play an essential role in achieving United Nations-Sustainable Development Goals (UN-SDGs) 2030 by creating job opportunities, alleviating poverty, promoting innovation and fostering sustainable industrialisation, and reducing income inequalities. According to Pakistan’s Economic Survey 2021-22, approximately 3.25 million SMEs account for nearly 90% of all the businesses operating in Pakistan. This sector holds approximately 40% and 25% of the country’s annual GDP (gross domestic product) and exports, respectively.
