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Winter
2017
h 1 - Re-Tie - IMG_6075
MAG
10
SWITCH-Asia turns
This project is funded The SWITCH-Asia Network Facility is implemented by GFA Consulting Group GmbH
by the European Union. and Collaborating Centre on Sustainable Consumption and Production (CSCP).
SWITCH-Asia MAG Winter 2017
ACKNOWLEDGEMENTS
Publisher Editor
SWITCH-Asia Network Facility Silvia Sartori
Collaborating Centre on Sustainable Consumption
and Production (CSCP) Associate editors
Hagenauer Straße 30 Uwe Weber, Kartika Anggraeni
42107 Wuppertal
Germany Proofreading
Judith Pretty
Phone | +49.202.45 95 8.10
Fax | +49.202.45 95 8.31 Design
www.switch-asia.eu Elmar Sander (www.elmarsander.com)
network.facility@scp-centre.org
ABOUT DISCLAIMER
The overall objective of the SWITCH-Asia Programme This publication has been produced with the assistance
is to promote sustainable growth, to contribute to the of the European Union. The contents of this publication
economic prosperity and poverty reduction in Asia and are the sole responsibility of GFA Consulting Group
to mitigate climate change. For more information, see: GmbH and can in no way be taken to reflect the views
www.switch-asia.eu of the European Union.
Cover photo sources (top down, left to right), projects: Sustainable Rattan Industries, Electric Motor Systems, CSR Vietnam, MEET-BIS, ESEEC, Re-Tie, SUSTEX, Food and Beverages, Train the Trainers, Wood Processing,
Industrial Symbiosis, Clean Batik Initiative, GPIOS, Voluntary PPPs, Biomass, Higher Efficiency Transformers, Eco-friendly Jute, Pro Sustain, Eco-friendly Bamboo, SMART Cebu, SPIN-VCL, SUS BIRD, WEEE Recycle, Zero
Carbon Resorts, ACIDLOOP, Automotive SCCM, EMAS Global China, GetGreen, Low Energy Housing, Lead Paint Elimination, Greener Construction, MSME Clusters, Rewin, SC in Urban China, SEID, SCOPE, Myanmar
Cook Stoves, Tourism in Bhutan, Vertical Shaft Brick Kilns, Hand-woven Textiles, W2E in Rice Milling Sector, Capacity, Edible Bamboo, Efficient Air Conditioners / ASEAN Shine, Green Homes project, Greening Sri
Lankan Hotels, Heat Pump Water Heater Challenge, Jute Diversified Products, Improved Cook Stoves, Printing and Dyeing, SPRING, PROSPECT, Sheep Wool Building Insulation, SMART Myanmar, SuBuMa, Reducing
Plastic Bag Waste
2
EDITOR IAL
Celebrating a decade of
SWITCH-Asia interventions
N
ow officially a Sustainable Development Goal (SDG 12),
Sustainable Consumption and Production (SCP) is firmly
established in the development agenda, adopted in 2015.
The SWITCH-Asia Programme contributed to the related processes,
through its ten-year commitment to supporting development, pro-
motion and implementation of SCP projects and policies in 17 out
of its 19 Asian target countries.
In its first decade, the Programme has been supporting 100 SCP
promotion and demonstration projects in the region, including
National and Regional Policy Support Components. These projects’
successful work has been documented through the SWITCH-Asia
website, SWITCH-Asia videos and publications (e.g. briefings, impact
sheets, studies such as ‘Sustainable Asia’), all produced and shared by
the SWITCH-Asia Network Facility. This 2017 issue of the SWITCH-Asia
Magazine reviews the impact and some milestones of the first decade
of SWITCH-Asia grant projects.
The SWITCH-Asia Magazine has been highlighting particularly
successful projects and achievements, whilst exploring current SCP
themes such as ‘Green finance for MSMEs’, contributions of ‘Green
Growth to Poverty Reduction’ and challenges and opportunities
resulting from the ‘Circular Economy’ approaches in Asia. First pub-
lished in 2014, the Magazine established itself as a relevant flagship
publication for the global SCP community.
Starting from 2007, the Programme has granted support to
consortia totalling more than 400 Asian and European not-for-profit
partners, about 100 private sector associates and benefitting up to
30 000 Asian micro, small and medium-sized enterprises (MSMEs).
The environmental performance of their operations has been raised
and their products’ and services’ environmental quality improved.
In short, their environmental sustainability enhanced. Considering
that the countries where SWITCH-Asia works account for about one
3
SWITCH-Asia MAG Winter 2017
Starting from 2007, the Programme has granted
support to consortia totalling more than
400 Asian and European not-for-profit partners,
about 100 private sector associates
and benefitting up to 30 000 Asian micro, small
and medium-sized enterprises (MSMEs).
third of the world’s population, the Programme’s Magazine article from India illustrates, it is prom-
environmental impact cannot be underestimated. ising that a few projects are successfully designing
These interventions increased the resilience and sustainable access-to-finance solutions that are
domestic competitiveness of the cooperating SMEs, conducive to a long-term continuation of their
made existing occupations safer and created new initial interventions.
jobs, thus contributing to the reduction of poverty Lastly, with this issue the current SWITCH-Asia
in Asia, which is home to more than 320 million of Network Facility would also like to bid farewell to
the world’s extreme poor. As the poverty challenge its readers. At the end of 2017, the mandate of the
persists, the focus of the latest SWITCH-Asia calls for current team is coming to an end, while a new SCP
proposals shifted to Asia’s least developed countries Facility is being established.
(LDCs). On behalf of the SWITCH-Asia Network Facility
Simultaneously, the growth of Asian economies team, I would like to express our sincere appre-
continues to bring about an expansion of the local ciation to all our partners and stakeholders with
middle classes, with their increased consumption whom we have been cooperating since September
power and demand. Yet, up to now, only about 15% 2013. We are thankful to all those who followed
of the contracted SWITCH-Asia projects explicitly and supported our wide-ranging work in the course
address the topic of Sustainable Consumption. of these 51 months. Our joint efforts to create syn-
Future Programme design may respond to this ergy, promote best practices and share know-how
imbalance by providing additional incentives for have helped guide Asia-Europe cooperation along
consortia that intend to work on this important the path towards more sustainable development.
but nevertheless contentious theme.
Whether focused on sustainable consumption Uwe Weber
or production, the work to be done in Asia’s de- Team Leader, SWITCH-Asia Network Facility
veloping countries can’t always be fitted into the
common four-year project contracting framework,
which questions the organisational and financial
ABOUT
sustainability of projects beyond their EU-funded Dr. Uwe Weber is the Team Leader of
time window. In particular, for projects to make a the SWITCH-Asia Network Facility.
long-lasting impact, it remains crucial to mobilise
He can be reached at:
private sector finance and commercial credit to
uwe.weber@scp-centre.org
continue their work in the long-term. As the
4
Contents
EDITOR IAL Celebrating a decade of SWITCH-Asia interventions 3
TEN YEARS OF SWITCH-ASIA
Supporting Asian SMEs in achieving 6
sustainable development
ACCESS TO FI NANCE
Financing sustainable production among Indian MSME Clusters 20
SOCIAL IMPACT
SCP as a women’s empowerment resource 26
MU LTI-COU NTRY IMPACT
Protecting children’s health by eliminating lead paint 30
N EW FRONTI ERS
First SWITCH-Asia project in Afghanistan 36
TECH NOLOGY IMPACT
Exploring the potential of improved cook stoves 42
CHANGI NG LIVES
Weaving new livelihoods 48
POLICY IMPACT
Outlawing illegally logged timber from the Indonesian market 52
LONG-TERM SUSTAI NABI LITY
Asian green products enter international markets 54
COU NTRY FOCUS: N EPAL
Nepal moves towards SCP 56
PARTN ER
PROGRAMME
The SwitchMed Programme 64
PARTN ER
PROGRAMME
Switch Africa Green 68
PARTN ER
I N ITIATIVE
The EU SWITCH to Green Initiative 72
ANNOUNCEMENTS Farewell from the SWITCH-Asia Network Facility 75
5
SWITCH-Asia MAG Winter 2017
TEN YEARS OF SWITCH-ASIA
Supporting Asian SMEs
in achieving sustainable
development
S
By Kartika Anggraeni ustainable Consumption and Recent studies have identified linkages
Production (SCP) has been recog- among SDGs, and SDG12 can be linked
nised as an integral part of the to other 14 goals (Figure 1). This under-
2030 Agenda for Sustainable Devel- lines the prominent role of the SWITCH-
opment. It has become a standalone Asia Programme. SWITCH-Asia has been
Sustainable Development Goal (SDG involved in promoting SCP practices in
12) and a central component of many Asia through its support to 17 Asian
of the 17 goals and 169 targets. The countries in the past ten years (2007-
importance of SCP patterns in achiev- 17), specifically towards small- and
ing the 2030 Agenda is shown through medium-sized enterprises (SMEs) which
many interlinkages between targets generally form about 90% of enterprises
under other goals with SDG12 (Le Blanc, in developing countries. SMEs are the
2015). backbone of Asian economies and
6
FIGURE 1
Links among SDG 12 on SCP and other goals
Energy
Sustainable management
of natural resources Sustainable Infrastructure and
reporting industrialisation
Oceans Energy
Sustainable public
efficiency 10 YFP
procurement
on SCP
Upgrade infrastructure,
Marine pollution, clean technologies
nutrients, debris
Information / awareness
of sustainable lifestyles
Water
Water scarcity
efficient use Sustainable Education
development education
Pollution
reduction
Gender
Peaceful and
inclusive societies
Management of
chemicals and wastes Decouple economic growth from
environmental degradation, SCP
Hazardous
chemicals
Growth and
Reduce
Reduce environ- food losses employment
mental impact Reduce, reuse,
recycle
Health Sustainable food
production systems
Public
transport
Hunger
Cities Terrestrial
ecosystems
Poverty
Climate Change
Source: Le Blanc (2015)
working with them to embrace SCP Policy Support Component (RPSC), im- engage with consumers to promote
contributes to creating huge economic, plemented by the UN Environment, and sustainable consumption (SC).
environmental and social impacts. Since the Network Facility (NF). Total funding In general, SWITCH-Asia projects
2007, the Programme has provided fun- reaches EUR 300 million (2007-20). contribute to the countries’ national
ding to 95 grant projects (completed and With a focus on greening the production objectives, especially in reducing envi-
ongoing), four National Policy Support side, SWITCH-Asia grant projects mainly ronmental impacts of their economic
Components (NPC) and one Regional work with SMEs, although they also growth along with the social problems
7
SWITCH-Asia MAG Winter 2017
that accompany industrial advance- jects, the SWITCH-Asia Programme has
ment. Therefore, these projects engage increased the uptake of SCP considera- Economic impact
with various industrial sectors and bly in the Asian SME sector. This article
stages of value chains (Figure 2), e.g. provides an overview of the grant SWITCH-Asia grant projects have con-
18% out of 95 projects address the projects’ contribution to eight ‘impact tributed to economic improvements for
highly polluting textiles and leather areas’. Overall, impacts are more long- their beneficiaries, especially the key
sector. Another 18% of the projects take term and SWITCH-Asia projects on target group of SMEs. This economic
place in various industrial sectors, here average have a lifetime of three to four impact is frequently the result of the
called ‚multi-industries‘, thus creating a years. So, regardless of their name, impact implementation of cleaner production
wider impact in the countries. The next areas actually highlight the improvements or energy/resource efficiency (RECP) in
key sectors for SWITCH-Asia projects are made by the projects in their key areas their production processes. This in turn
building and construction (14%) and of intervention. Data available so far refer enabled the SMEs to reinvest the ensu-
food and beverages (10%). SCP practices to 53 projects that are already completed ing savings to expand their businesses,
implemented by SWITCH-Asia projects as of April 2017, providing a compre- thus creating new jobs, increasing
are illustrated in Figure 3. During its hensive picture of results achieved by business competitiveness and eventu-
first decade and through its grant pro- these individual grant projects. ally improving local people’s livelihood.
FIGURE 2
Industries where SWITCH-Asia projects operate
3% 2% 10%
2% Cook stove Transportation Electrical
3% Chemicals equipment and
machinery
Metal
fabrication
4%
Renewable
energy
5%
Tourism 18%
Multi-
industries
5%
Waste and
recycling
6%
14% Wood and
Building and non-wood forest
construction products
10% 18%
Food and
Textiles
beverages
and leather
8
FIGURE 3
SCP practices supported by SWITCH-Asia
• Designing for • Improving • Greening the • Creating • Eco-labelling • Greening
• sustainabilty production supply chain demand for products public
• Eco-Design • Emissions reduct. • Sustainability better products • Product • procurement
• Products for • Technical criteria • Consumer • information • Sustainable
the poor innovation • Knowledge awareness disclosure public procu-
• Product • CSR sharing raising • Eco-labelling rement
• Improvement • Environmental • Promoting schemes • Encouraging
management sustainable green product
systems lifestyle supply
• Industrial • Marketing for
symbiosis eco-products
VA L U E C H A I N
Raw material Production Supply Retail Usage End-of-life
Policy instruments to provide support
SWITCH-Asia projects have used various footprints. Projects addressing natural their SMEs, accumulated annual energy
methods to identify and document their resource utilisation, such as timber and savings of approximately 93 800 GWh
economic impact. Asian SMEs are micro rattan, worked closely with farmers and (Figure 5). Energy savings sometimes
and small in size, and many of them are those merchants who collect raw only materialise after the projects are
also informal and do not keep sufficient materials from the farmers and sell it completed. For example, the ASEAN
accounts to track the economic improve- to factories or distributors, promoting SHINE (Efficient Air Conditioners) project
ments that result from their participati- more sustainable harvesting methods reported a reduced consumption of
on in a SWITCH-Asia project. as well as local eco-labels and product electricity due to its success in facili-
However, some numbers can help certification. Most of the SWITCH-Asia tating the harmonisation of ASEAN’s
better define the SWITCH-Asia projects’ projects focused on ‘greening’ the midd- minimum energy performance stand-
performance. Cumulatively, seven SWITCH- le stages of value chains by working ards (MEPS). When all ASEAN countries
Asia projects have facilitated investments with SME producers, manufacturers, adopt these MEPS, the electricity con-
in new, clean technologies of around distributors and retailers. However, the- sumption of the ASEAN residential sec-
EUR 22.3 million, five projects facilitated re are also some projects addressing the tor would be reduced by 5373 GWh per
an increase in revenues totalling EUR final stage of the waste management annum. These project reports indicate
17 million, and another five projects value chain (reuse, recycling). Often, that the improvements made during
helped their SMEs achieve annual cost the projects cover three major areas of project implementation generally con-
savings of around EUR 6 million in total. environmental improvements, which tinue beyond a project’s lifetime.
To put this impact in context, small are energy, water and waste. Projects working within the building
enterprises in Bhutan have working and construction sectors identified
capitals of up to EUR 130 000 and in Decrease in energy consumption substantial opportunities to improve
Nepal of up to EUR 250 000. sustainability by reductions in energy
Reducing energy consumption not only consumption. The energy efficiency
Environmental benefits SMEs in terms of lowered pro- measures include LED lighting, solar
improvement duction costs but also helps to mitigate panels, and insulation technology.
climate change. Nine projects reported The Low Energy Housing project, pro-
SWITCH-Asia projects have implemented helping SMEs achieve total energy sa- moting energy efficient buildings in
various SCP measures at different stages vings of about 30 000 GWh during the China, reported to have achieved energy
of the value chains of the industries in projects’ three to four years of activities savings amounting to approximately
order to reduce the SMEs’ environmental (Figure 4). Another nine projects, through 18 610 GWh during its implementation.
9
SWITCH-Asia MAG Winter 2017
FIGURE 4 Urban China project reports that those
Total energy saving during implementation of nine retailers and suppliers with whom the
SWITCH-Asia projects project was working achieved 11 140
GWh energy reduction during the pro-
100,000,000,000 ject’s life time.
10,000,000,000
1,000,000,000
Among the nine projects’ reporting
Total energy saving (kWh)
100,000,000 annual energy savings, three projects
10,000,000 show a major reduction, VA3 in China,
1,000,000
Thai Automotive SSCM in Thailand, and
100,000
10,000 ASEAN SHINE in eight ASEAN member
1,000 countries. The VA3 project addressed
100
the textiles and laundry sectors, Thai
10
1 Automotive SSCM the automotive supply
chain, and ASEAN SHINE more highly
g
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a
AS
s1
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ls
OP
G
in
in
in
te
IN
Io
M
rt
LO
us
Ch
Ch
Ho
GP
R
efficient air conditioners. These are
so
AE
SP
ID
Ho
s(
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al
Re
n
AC
ba
ka
ob
nd
y
n
rg
energy-intensive industries or products
Ur
an
Gl
o
sla
e
rb
iL
En
in
AS
eI
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Sr
SC
EM
in
w
where SCP measures can create a sig-
ro
ng
Lo
pp
Ze
ni
ili
ee
Ph
nificant change in a company’s energy
Gr
n
ee
profile. Further, the energy-intensive
Gr
automotive and textiles and laundry
sectors show where leverage can be
FIGURE 5 created and further replicated. The
Annual energy saving realised by SMEs associated with nine Thai Automotive SSCM and VA3 China
SWITCH-Asia projects projects enabled a combined annual
reduction of electricity consumption of
100,000,000,000
87 400 GWh.
10,000,000,000
1,000,000,000
Annual energy saving (kWh)
100,000,000 Reduction in water consumption
10,000,000
1,000,000
100,000
As a natural resource, water is becoming
10,000 increasingly scarce, not only in water-
1,000 stressed countries like Pakistan. Sustain-
100
able water management contributes
10
1 not only to reduced water pollution,
but also to local communities’ ability to
a
M
E
s
s
an
gy
ID
)
BK
er
er
IN
in
SC
SE
er
st
rm
st
Ch
VS
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En
ki
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adapt to climate change.
S
fo
s(
Cl
Pa
3
N
iv
to
VA
ns
ln
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ot
p
SM
Ki
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om
Ten SWITCH-Asia projects have
fT
as
ds
ick
M
W
yo
ut
ar
Br
ew
iA
nc
reduced their SMEs’ water consump-
ft
a
ha
St
cie
Th
er
lS
Effi
tion. Out of ten, four projects achieved
at
ica
W
er
rt
gh
Ve
substantial total water savings during
Hi
Retailers and suppliers in the fast-moving
consumer goods (FMCG) supply chain
also have considerable scope to improve The Low Energy Housing project
energy efficiency, especially when it reported to have achieved energy
comes to supply chains in a country like savings amounting to approximately
China with a large population (leverage 18 610 GWh during its implementation.
for promoting sustainable products/
services) and a long distance between
Photo: Low Energy Housing project
cities (sustainable logistics). The SC in
10project implementation that cumula-
tively amounts to 143.1 million cubic
meters (m3), with the SC in Urban China The Industrial Symbiosis
project contributing 141 million m3. project (China) diverted waste
This indicates where potential leverage from landfill through its focus
can be created in future projects, i.e. on promoting an eco-industrial
sustainable consumption. The SC in park to improve industrial
Urban China project facilitated volun- waste management Photo: SusTex project
tary agreements between retailers and
suppliers to improve their environmental
performance in terms of energy effi-
ciency, water consumption, etc. At the
end of the project, 40 retailers and 3 419 By recycling used water in the
suppliers in Beijing and Tianjin were in- textile park, SusTex reported
volved in project activities, contributing that SMEs reduced the use
to these savings of 141 million m3. of groundwater by about
Five projects reported annual reduc- 500 m3 per day.
tion of water consumption. Together, Photo: Industrial Symbiosis project
these projects achieved reductions of
7.2 million m3, where the VA3 China
(laundry and textiles sector) and Water
Stewardship Pakistan (textile process- Out of the ten projects, three projects Waste reduction and pollution
ing, sugar, paper & pulp, and leather also report on individual SME’s reduc- prevention
tanneries) projects provide the major ing their annual water consumption.
contribution of some 6.3 million m3. SMART Cebu in the Philippines, SEID in Reducing waste and pollution due to
The VA3 project promoted water reuse Bhutan and Nepal, and Water Stew- inadequate treatment and disposal
and incorporation of a tunnel washer to ardship in Pakistan documented their benefits both the environment and
reduce water consumption. Water Stew- SMEs’ improved annual water savings people. SMEs involved in SWITCH-Asia
ardship Pakistan implemented better as respectively 390 m3/SME in the projects generally achieve this target by
water management practices (BWMPs) Philippines, 20 m3/SME in Nepal, 153 acquiring clean technologies or embrac-
which include technological changes m3/SME in Bhutan, and 127 429 m3/ ing resource efficiency principles, such
within SMEs, e.g. use of reverse osmosis SME in Pakistan. The Better Water Man- as good housekeeping which decreas-
and softeners for water treatment, use agement Practice (BWMP) employed es wastage of energy and materials.
of level switches in water storage tanks, by the Water Stewardship Pakistan Reports from 12 projects indicate their
reuse of cooling water (in mills bear- shows the potential for replication at achievements in reducing waste.
ings, turbines bearings), use of efficient the SME level. SMART Cebu promoted Out of 12 projects, six projects effec-
motors, and reuse of vessels’ cooling the installation of aerator taps and the tively reduced total solid waste during
and hydraulic testing water (100-400 reduction of cistern volume to reduce their three to four years of activities,
m3/day). water consumption. totalling approximately 2.3 million
tonnes. The Industrial Symbiosis project
(China) diverted waste from landfill
through its focus on promoting an eco-
industrial park to improve industrial
waste management, where the waste
of one company becomes raw material
SMART Cebu project documented their
for other companies, thus partially ‘clos-
SMEs achieved annual water saving of
ing the loop’ and following a circular
390 m3/SME in the Philippines
economy approach. Through RECP
measures, SMEs involved in the Thai
Automotive SSCM project reduced solid
Photo: SMART Cebu project
waste by about 2100 tonnes per year.
11SWITCH-Asia MAG Winter 2017
Two projects reported on total waste- FIGURE 6
water reduction during their lifetime, Five areas of social improvements reported by
totalling 0.28 million m3. Here the 53 SWITCH-Asia projects
Greening Sri Lankan Hotels project
contributes to the majority of savings,
where hotels reduced their water usage. Improved livelihood (increased
Another two projects, SusTex and VA3 income for families)
Improved working conditions
China, reported on SMEs’ annual re- (occupational health and
duction of wastewater discharge. Both safety / OHS measures)
Better living conditions
projects worked with the textiles sector (less pollution, 8%
that uses water intensively. Changes involvement of
marginalised groups)
in the way textiles and laundry SMEs 39%
use water have made huge positive
24%
impacts. By recycling used water in the
textile park, SusTex reported that SMEs
reduced the use of groundwater by 14%
about 500 m3 per day. Not only crea- 15%
tion of infrastructure for effluent and
Increased human
sewage treatment, water harvesting,
resource capacity
and water recycling, but the textile (Green) Job creation
park also installed a solar PV system to
reduce SMEs’ non-renewable energy
consumption. A similar approach has
been followed by the VA3 project. By changing the way SMEs do their business,
implementing good housekeeping Social improvement instead of working directly with produc-
measures, such as reduction of rewash- ers, consumers or surrounding commu-
ing and optimised internal logistics, Depending on the industrial sector, nities. Social impacts on target groups
the textiles and laundry companies SWITCH-Asia projects contribute to resulting from their main engagement
reduced their water usage. The project social improvements both directly and with SMEs can be expected, such as saf-
also motivated participating companies indirectly that often continue after a er working conditions for SME workers
to improve air quality and reduce soil project is completed. Out of 53 com- and reduction of hazardous discharges
contamination by eliminating volatile pleted projects, 40 projects provide adversely affecting communities in
organic compound (VOC) emissions qualitative information on their social the vicinity. Considered together, all 53
from dry cleaning equipment. impacts, while 13 projects focused on projects have engaged with over 36 600
SMEs and about 200 000 farmers.
Despite the complexity of reporting on
TABLE 1: SIX SWITCH-ASIA PROJECTS REPORTING ON JOB CREATION social impacts, the projects generally report
on five areas of changes (Figure 6), i.e.:
Country Project Sector
1. improved working conditions
(through implementation of occu-
India SusTex Textiles and leather
pational health and safety/OHS);
2. (greener) job creation;
China Train the Trainers Building and construction
3. improved human resource capacity;
4. better livelihoods, (incl. involvement
India WEEE Recycle Waste and recycling
of marginalised groups);
Nepal Vertical Shaft Brick Kilns Building and construction 5. poverty reduction through increased
families’ income.
Cambodia Waste to Energy Renewable energy
Almost 40% of projects have improved
Nepal Green Homes Building and construction SMEs’ working environments by pro-
moting and implementing occupational
12health and safety (OHS) measures, such FIGURE 7
as the use of personal safety equip- Five areas of climate change mitigation and adaptation
ment (helmets, gloves, masks). Among efforts of 43 SWITCH-Asia projects
others, these improvements resulted in
Increased awareness
a reduction of work-related accidents. 14% of climate change
This identifies where future SWITCH-
Asia projects may focus their efforts to
bring about effective positive impacts 5% Forest
conservation 43%
GHG emission
within industries, i.e. safer working reduction
CO2
environments, which further influences
workers’ families, not least by transfer-
ring good housekeeping practices to 16% Renewable
energy use
their homes.
Another two areas where SWITCH-
Asia projects create significant social
outcomes are better living conditions
due to less pollution and waste emis-
sions by the SMEs, and (green) job 22% Fuel consumption
reduction
creation due to new ways of production
and business development. SMEs often
create additional profits due to the reduction of approximately 24.7 million emissions. The numbers provided here
implementation of SCP measures. They tonnes of CO2e (Figure 8). Another ten can only be based on estimations, as
re-invest the additional earnings in projects achieved a total GHG emission projects had different ways of measur-
expanding their factories, thus creating reduction of approximately 1.17 million ing their results. The other 19 projects
new jobs. Six projects report on the tonnes of CO2e during their project reported on improving public aware-
creation of roughly 5100 new jobs, implementation (Figure 9). How did ness of climate change related issues.
substantially contributing to improved the projects achieve these significant Furthermore, out of the 43 projects,
livelihoods (Table 1). results? It was mainly through SMEs 16 projects reported on reductions in
reducing their energy consumption fuel consumption (diesel, coal, etc.).
Contributions to climate (electricity, fuel) and improving resource Out of these 16 projects (Table 2), three
CO
change
2
mitigation and efficiency. Improving efficiency in projects helped SMEs reduce their use
production and implementing good of liquid fuels (diesel), saving a total of
adaptation
housekeeping have led to reduced CO2 5.6 million litres. Another three projects
The SWITCH-Asia Programme’s focus
on greening the SME sector in Asia
also contributes to climate change FIGURE 8
mitigation and adaptation. Out of 53 Annual GHG emission reduction reported by 14 SWITCH-Asia projects
projects, 43 projects have addressed
100,000,000
climate change issues either directly 10,000,000
or indirectly. These projects operated 1,000,000
in sectors such as textiles and leather, 100,000
10,000
machinery, utilities, water, and food and 1,000
beverages. Five common areas where 100
the projects share similar activities are 10
1
GHG emission reduction, reduced fossil
om a
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M
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fuel consumption, renewable energy
PE orm
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use, forest conservation, and increase
p
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EE
of public awareness on climate change
at i Au
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Th
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issues (Figure 7).
er
C
yb
GHG emission reduction
W
er
Together 14 projects achieved a
gh
in tonnes CO2e per year
Hi
cumulative annual GHG emission
13SWITCH-Asia MAG Winter 2017
FIGURE 9 project successfully managed to certify
Total GHG emission reduction reported by 10 SWITCH-Asia projects 1 142 ha of forests in Vietnam, Cambodia
and Laos. Similarly, the Eco-friendly
1,000,000 Bamboo project in China replaced the use
100,000
10,000
of 256 000 m3 timber with 220 000 m3
1,000 bamboo, reducing pressure on slow-
100 growing trees by increasing the use of
10
fast-growing bamboo.
1
Eleven projects increased awareness
g
a
is
rb
AS
s
m
ls
il
ID
iln
ta
in
in
os
te
na
-U
SE
M
us
Ch
Re
kK
Ho
bi
of the issue of climate change towards
PP
AE
et
Ho
ym
n
ric
n
Vi
Su
n
ee
ba
ka
lS
tB
y
IS
Gr
rg
Ur
the public or their beneficiaries. The
an
B
ia
af
T-
e
tr
iL
En
in
Sh
EE
s
Sr
du
SC
w
M
al
Timber Indonesia project contributed to
ng
In
Lo
tic
ni
r
GHG emission reduction
Ve
ee
climate change mitigation by facili-
Gr
in tonnes CO2e
tating an amendment of national law
on Timber Legality Assurance System
reported a reduction in usage of 375 000 tially implemented in the Philippines (TLAS). TLAS is the basis for the Volun-
tonnes of coal, which is linked to energy and at the time of writing the second tary Partnership Agreement (VPA) on
saving. phase is being implemented in Thailand, Forest Law Enforcement, Governance
Furthermore, 13 projects successfully reported the use of 0.79 GWh solar and Trade (FLEGT) with the European
integrated renewable energy sources, energy sources. Union (EU). The system certifies that
for example biomass or heat recovery Four projects contributed to forest timber from Indonesian forests and
from hot wastewater streams. The Zero protection, supporting climate change industries is legally sourced. Influenced
Carbon Resorts project, which was ini- mitigation. The Sustainable Rattan by this project result, in 2016, the
Indonesian Ministry of Trade amended
its regulations and started requiring all
TABLE 2: 16 PROJECTS REPORTING ON REDUCTION OF FUEL CONSUMPTION wood-based products to be certified,
while the previous regulation from
Country Project 2015 excluded furniture.
1 Cambodia, Laos, Vietnam Sustainable Rattan
2 Bangladesh Re-Tie
Increasing access to
3 Pakistan SCI-Pak
finance
4 China Higher Efficiency of Transformers
Many SMEs share the same problems in
5 Philippines Green Philippine Islands (GPIoS) lacking access to finance. Among others,
6 Malaysia Biomass-SP this is due to their often informal status
and lack of reliable and meaningful
7 Philippines Zero Carbon Resorts / ZCR
bookkeeping. Therefore, banks and
8 Bhutan Tourism in Bhutan financial institutions consider SMEs as
particularly risky debtors.
9 Nepal Vertical Shaft Brick Kilns
Out of 24 projects that reported on
10 Bhutan, Nepal SEID SME green finance, six projects reported
Automotive SSCM the volume of finance leveraged, total-
11 Thailand
ling approximately EUR 6 million. Out
12 Vietnam Get Green of the six projects, the MSME Clusters
13 Cambodia Waste to Energy project in India leveraged loans of EUR
4 million for 100 MSMEs from state-
14 India MSME Clusters
owned banks, such as Punjab National
15 China EMAS Global China Bank, Oriental Bank of Commerce, Axis
Bank, Small Industries Development
16 Pakistan Water Stewardship Pakistan
Bank of India (SIDBI), State Bank of
14India, and State Bank of Patiala. Another FIGURE 10
five projects mobilised EUR 1 million of SME green finance from financial institutions leveraged by
investments in the sectors of automotive, SWITCH-Asia projects
renewable energy, building and con-
struction, and food. These six projects
engaged with banks and financial insti-
tutions successfully to increase SME
access to finance for sustainable pro- 4,000,000 623,000 595,000 450,000 250,000 70,000
duction (Figure 10). Figure 11 illustrates
a range of interventions by the SWITCH- MSME Automotive SusTex Waste to Vertical Shaft Soybean
Clusters SSCM Energy Brick Kilns Processing
Asia projects in addressing those
challenges faced by SMEs as well as
Leveraged finance (in EUR)
financial institutions.
In addition, three projects reported
on facilitating business agreements FIGURE 12
between large companies and SMEs as Investments made by companies, facilitated by three
well as private investments by SMEs for SWITCH-Asia projects
the acquisition of clean technologies.
The agreements and investments have 12,000,000
a total value of EUR 14.5 million (Figure 10,000,000
12). 8,000,000
6,000,000
Another three projects helped SMEs
4,000,000
to overcome hurdles successfully in 2,000,000
accessing governmental SME financing 0
Eco-friendly Bamboo Vertical Shaft Brick Kilns Automotive SSCM
programmes (Figure 13). So far, this
type of public financing (government
FIGURE 11
Types of SWITCH-Asia project interventions in improving SME access to finance (A2F)
The demand side SWITCH-Asia’s role The supply side
What are the barriers faced What are the barriers faced
by SMEs? by financial institutions?
• Lack of financial literacy • Addressing the legal framework • SMEs lack collateral
• Lack of financial for A2F • Banks require SMEs’
transparency • Promoting financial solutions transparency
• Services from financial • Increasing capacity of SMEs to • Lack of effective channels
institutions perceived access finance and modalities for
too costly • Addressing banks from awareness communication with
• Poor marketing and to technical assistance credit providers for
communication by • Enabling investment linkages funding purposes
financial institutions • Banks do not consider
SME lending as profitable
business
Source: SWITCH-Asia Network Facility (2013). Greening SMEs by enabling access to finance: Strategies and experiences from the SWITCH-Asia Programme.
15SWITCH-Asia MAG Winter 2017
incentives, subsidies) constitutes the FIGURE 13
largest part of SME green finance SME financing through government financing instruments
reported by SWITCH-Asia projects,
highlighting the role of government in
1,000.000,000
supporting the SME sector.
100,000,000
Based on the available data, 330 10,000,000
SMEs in China’s building and construc- 1,000,000
100,000
tion sector benefitted from government
10,000
subsidies totalling EUR 1 billion. The 1,000
Low Energy Housing project succeeded 100
in convincing the Chinese government 10
1
of the importance of installing energy Low Energy Housing VA3 China SusTex
efficiency measures in new buildings.
Financing (in EUR)
The VA3 project managed to get the
government on board, providing green
incentives of EUR 13 million to com- Financing schemes and implementing several financing
panies signing voluntary agreements schemes, the project identified leasing
where companies have to improve their The SCoPE / Soybean Processing project, to be the most viable for the industry,
energy efficiency and reduce waste. The implemented in Indonesia, provides an where production equipment serves as
India-based SusTex project facilitated example of a financing scheme which collateral (Figure 14). Using the leasing
financial support from the government has proven to be effective. Through scheme, the project leveraged SME
to SMEs of EUR 3.4 million. engagements with financial institutions green finance of around EUR 70 000.
FIGURE 14
Viable SME financing scheme for tofu and tempeh producers in Indonesia,
facilitated by the SCoPE project
4
Required documents
submission
Expressing interest Checking with FIs for
to buy new equipment leasing opportunity
SMEs 1 2 Financial Institutions
(tofu & tempeh producers) Selling points (banks, micro financiers)
at KOPTI (cooperatives)
or equipment suppliers
€
6 5
New equipment Money
Survey 7
Payment in
3 installments as agreed
Source: SWITCH-Asia Soybean Processing (SCoPE) project impact sheet (2015)
16Despite various project interventions, FIGURE 15
SMEs in Asia still encounter challenges Main target groups of SWITCH-Asia projects
in obtaining loans from financial insti-
tutions. This leaves ample room for
further improvement or experiments
in financing schemes by ongoing and
upcoming SWITCH-Asia projects. Cur-
rently there are two projects working Private sector
primarily on SME financing, which are (MSMEs)
Financing Energy and Environmental
Solutions/FEES1 and Asian Cleantech
MSME Financing Network/ACMFN 2. Policymakers Consumer
(governments) organisations
SWITCH-Asia
projects
Multi-stakeholder
engagement Financial R&D
institutions institutions
All SWITCH-Asia projects address a
(banks) (universities)
range of target groups. Based on the
experience collected by 53 projects,
SWITCH-Asia projects generally address €
the following five stakeholder groups:
private sector (SMEs), policymakers,
financial institutions, research insti-
tutions, and consumer organisations
(Figure 15).
Depending on the sector and level
of engagement, SWITCH-Asia projects Some 7000 organisations, e.g. government
often work with: agencies, companies, business membership
1. business membership organisations
(BMOs), cooperatives or chambers organisations, consumer organisations,
of commerce, providing access to universities, etc., have cooperated with the
their SME members;
2. national/provincial/city-level
53 SWITCH-Asia completed projects.
policymakers and governments
(various ministries) to obtain policy
support;
3. financial institutions (FIs), such as
banks and leasing companies, to
identify potential SME financing
schemes and develop new ones; trade fairs or exhibitions. Involving busi- cies, companies, business membership
4. academic/research institutions, to ness associations as a project partner organisations, consumer organisations,
support the projects with research proved to be a strategic manoeuvre for universities, etc., have cooperated with
and data; almost all projects. It gives SWITCH-Asia the 53 SWITCH-Asia completed projects.
5. consumer organisations, to create projects access to a pool of member In addition, some projects have also
demand for new or more sustainable SMEs to be engaged in project activities. engaged with individuals; more than
products/services. Through the business associations, 600 000 individuals (trainers, promot-
So far, around 36 600 MSMEs have been projects also can ensure the commit- ers, salespersons, and consumers) were
engaged with 53 SWITCH-Asia projects, ment and participation of SMEs in the involved in various project activities
directly and indirectly, through project project activities effectively. Some 7000 (capacity building, study tours, exhibi-
activities such as seminars, workshops, organisations, e.g. government agen- tions).
1) http://www.switch-asia.eu/projects/fees-financing-energy-and-environmental-solutions/
2) http://www.switch-asia.eu/projects/msme-financing-network/ 17SWITCH-Asia MAG Winter 2017
Supporting SCP policy Out of 53 projects, 42 projects active- projects can be identified. The SusTex
development ly engaged with (local) governments project in India, for example, submitted
through dialogue and policy events, policy recommendations on OHS and
Realising the importance of engaging bringing specific SCP issues to gov- Social Security of Artisans and Craft
with governments to create an enabling ernment attention to muster their Workers that were adopted in India’s 12
policy environment for SCP-related support and endorsement. 26 projects FYP for the handloom and handicraft
investment, SWITCH-Asia projects submitted policy recommendations sector.
always work with national, provincial and/or guidelines to the governments In the ASEAN region, the AEMAS pro-
and city-level policymakers. The projects and, out of these, 13 projects had their ject contributed to the amendments of
organised policy dialogues and later recommendations taken up by gov- existing Energy Efficiency and Conserva-
submitted policy recommendations, ernment departments resulting in the tion Laws in ASEAN member countries.
based on experience of their pilot SMEs, issue of new policies, the amendment The ASEAN SHINE project managed to
as an input for policy changes favouring of existing ones or the integration into establish harmonised standards for
sustainable consumption and produc- government five-year plans (FYPs). testing methods for more efficient air
tion patterns. Introduction of SCP into Through policy recommendations, the conditioners, and established a regional
SME sectors in Asia requires a buy-in projects contributed their systematic policy roadmap and seven national
from governments that will provide knowledge of specific industrial sectors policy roadmaps towards an improve-
incentives and define ‘rules of the and problem analysis, which were ment of minimum energy performance
game’ benefitting SMEs that imple- often not available to policymakers, to standards (MEPS) in ASEAN member
ment, for example, cleaner production evidence-based policy processes. countries.
and resource efficiency practices and Several examples of new policy devel- In the Philippines, the Zero Carbon
technologies. opments facilitated by SWITCH-Asia Resort (ZCR) project instigated policy
changes, which resulted in making
participation in the ZCR project man-
CH I NA datory for new resorts, hotels or any
tourism-related establishment requir-
As China expands its economy and ing strategic environmental plan (SEP)
experiences unprecedented growth, clearance in Palawan. The WEEE-Recycle
industrial expansion has led to envi- project in India supported the devel-
ronmental degradation affecting the opment of e-waste management rules
health of Chinese citizens, such as sions, protection of drinking water issued by the Ministry of Environment
poor air quality in large cities. Real- sources and their quality improvement, and Forest (MoEF). The Timber Indonesia
ising the importance of reducing its management of hazardous chemicals project has seen success in their policy
environmental impacts while enabling and dangerous waste, and a reversal of engagement where the Ministry of
its economy to grow, the Chinese gov- ecological deterioration. Trade eventually revised its regulation
ernment has included green economy Complementary to these policy following the project’s recommen-
elements into its 11th Five-Year Plan. initiatives, the SWITCH-Asia Pro- dation. This new regulation requires
In the 11th Five-Year Plan (2006-10) gramme contributed to reduce Chinese the Timber Legality Assurance System
it has made provision to increase the industries’ environmental footprint by (SVLK) certification ‘without exception’
consumption of renewable energy introducing SCP to China’s SME sector. for all timber products for export from
sources. During this period, the total in- Out of 53 concluded projects, 30% Indonesia. The SVLK is the basis for a
vestment for combating environmental were implemented in China with total Voluntary Partnership Agreement (VPA)
pollution increased 15% annually. By grants of EUR 20.5 million. The main of the EU Forest Law Enforcement, Gov-
2009, the environmental investment sectors addressed by the SWITCH-Asia ernment and Trade (FLEGT), ensuring
had reached 1.33% of China’s GDP. projects included electrical equipment the legality of timber traded between
Taking this ambition further, the and machinery, wood and non-wood the EU and Indonesia.
Chinese government identified seven forest products, building and construc- These grant projects’ engagement
major targets in the 12th Five-Year tion, waste and recycling, textiles and with local policymakers complement
Plan (2011-15), which among others leather, chemicals, as well as food and the work undertaken by the SWITCH-
include reduction of pollutant emis- beverages. Asia Regional Policy Support Compo-
18nent (RPSC) and the National Policy Conclusions in furthering the adoption of sustainable
Support Components (NPSCs), which consumption and production (SCP) pat-
operate(d) in Malaysia, Indonesia, the Operating in various industrial, service terns. In their contributions to address
Philippines, Thailand and Sri Lanka. and agricultural sectors in developing these challenges, SWITCH-Asia projects
Asian countries, SWITCH-Asia projects clearly seized opportunities that resulted
cope with multiple challenges, especially in tangible economic, social, and envi-
ronmental improvements. The positive
contributions to the local economy, with
I N DIA further support from local governments
through targeted policies, is hoped to
India experienced strong economic attract further SMEs to implement SCP
growth in the last decade. However, practices. Projects’ engagements with
the growth comes at an environmental financial institutions and governments
price. According to a 2014 World Bank pave the way towards a green SME
report, the environmental degradation well as countering the degradation of industry, and eventually a green econ-
in India was estimated to cost EUR 67 forests and loss of biodiversity. omy, in many Asian countries including
billion annually or about 5.7% of GPD Contributing to the Indian 12th FYP China and India. Despite the many
in 2009. Clearly, enhanced environ- the SWITCH-Asia Programme funded positive impacts created by the projects,
mental protection would sustain many projects in India to promote sus- the effectiveness of SWITCH-Asia’s
India’s economic growth. tainable consumption and production approach to sustainable development
In the 12th Five-Year Plan (FYP 2012- patterns further. About 17% of 53 com- in Asian developing countries requires
17) the Indian government therefore pleted projects with a total funding of further study.
has identified ‘managing the environ- EUR 13.5 million were implemented
ment and ecology’ as one of 12 strate- in the country, putting India just after
gic challenges that the country needs China in terms of number of SWITCH-
to address. The identified environ- Asia grant projects. These projects were AUTHOR
mental challenges include mitigation operating in various industries, i.e.
and adaptation strategies for climate wood and non-wood forest products, Kartika Anggraeni
change, improved waste management textiles and leather, waste and recy- SCP Expert of the SWITCH-Asia
and enhanced pollution abatement, as cling, metal fabrication, and chemicals. Network Facility
kartika.anggraeni@scp-centre-org
REFERENCES
Online sources
SWITCH-Asia country studies on SME finance
http://www.switch-asia.eu/news/indonesia-becomes-the-first-country-in-the-world-obtaining-flegt-certificate/
http://www.euflegt.efi.int/publications/indonesia-eu-voluntary-partnership-agreement
http://www.oecd.org/china/greengrowthinactionchina.htm
http://12thplan.gov.in/forum_description.php?f=10
http://www.worldbank.org/en/news/feature/2014/03/06/green-growth-overcoming-india-environment-challenges-
promote-development
Printed sources
Schroeder, P., K. Anggraeni, U. Weber and S. Sartori (Eds.). 2017. Sustainable Asia: Supporting the transition to sustainable
consumption and production in Asian developing countries. World Scientific: Singapore. Link
Le Blanc, D. (2015). Towards integration at last? The sustainable development goals as a network of targets. In: UN DESA
(2015). DESA Working Paper No. 141.
19SWITCH-Asia Winter MAG 2017
SWITCH-Asia MAG Winter 2017
Photo: MSME Csusters project
€
ACCESS TO FI NANCE
Financing Sustainable
Production among Indian
MSME Clusters
Striving to improve energy efficiency in the foundry sector, a SWITCH-Asia
project designs access-to-finance solutions to enable green investments
L
By Mukesh Gulati, Sangeeta Agasty ike elsewhere in Asia, manufac- small and medium sized enterprises
and Ruchita Sanwal turing in the MSME sector plays (MSMEs) often find it hard to comply
a major role in the Indian econ- with environmental legislation due to
omy, contributing to 8% of the coun- various technical and non-technical
try’s GDP and represents the second limitations resulting in poor levels of
largest employer (over 100 million) in sustainability. It has been mentioned in
India after agriculture1. Despite their India’s Planning Commission’s Working
significant role in the economy, micro, Group paper (2012) that around 70%
20 1) Ministry of MSME, Government of India, Annual Report (2015-16)India. One of the key factors adversely providers and MSMEs themselves as
SWITCH-Asia project affecting the adoption of sustainable business partners. This addressed one
“Scaling Up Sustainable practices among MSMEs is considered of the key problems faced by MSMEs in
Development of MSME to be the non-availability of institution- adopting sustainable practices, i.e. the
Clusters in India” al finance. limited availability and access to credit
The SWITCH-Asia project entitled for sustainable production.
Scaling Up Sustainable Development of The project reached out to up to
MSME Clusters in India3 (2012-2016) en- 1 100 foundry enterprises across the
deavoured to enhance the competitive- three states of Punjab, Rajasthan and
1 100 foundry ness of less sustainable MSME clusters, West Bengal. Out of these, 474 received
enterprises across the while at the same time reducing their direct technical support to improve
three states of Punjab, adverse environmental and social im- their energy efficiency, leading to the
Rajasthan and West pacts such as improving social security saving of 24 992 metric tonnes of CO2
and occupational health and safety. emissions every year. In this context,
Bengal
The project was implemented by a con- the project assisted 101 enterprises to
sortium of national and international obtain sustainability-linked financing
partners, including FMC, GIZ (German from several banks in India.
bilateral technical development agen-
474 received direct cy), Global Reporting Initiative (GRI), MSMEs struggle to access credit
technical support to United Nations Industrial Development
Organisation (UNIDO), Indian Institute As reported by the Reserve Bank of
improve their energy
of Corporate Affairs (IICA) and Small India4, 8% of all MSMEs across different
efficiency
Industries Development Bank of India sectors in the country have access to
(SIDBI). The project implemented five banks and financial institutions, while
main activities, through work packages. the remaining 92% are excluded and
Out of these, Work Package Four spe- compelled to raise money through
CO2 Saving of 24 992 cifically aimed at enhancing the access informal channels.
metric tonnes of CO2 of MSMEs to credit through stronger Although medium and large enter-
linkages with Financial Institutions (FIs) prises can access credit through com-
emissions every year
and by developing innovative financial mercial banks and open debt markets,
products and delivery mechanisms many micro and small entrepreneurs
in cooperation with banks, Business remain under-served, particularly in
of total industrial pollution originates Membership Organisations (BMOs), the loan range of EUR 700 to 14 000
from MSMEs in India. In India, according financial consultants, equipment per enterprise. Such financial needs are
to a study2 from the Foundation for
MSME Clusters (FMC), 11 sub-sectors
have been identified which are econom-
ically significant, energy intensive and
environmentally sensitive clusters. Out
of these sectors, foundries are singled
out as the most significant polluters.
Excluding a few larger foundries, 96.6%
of small and micro foundries in India
suffer from technological obsolescence
Photo: MSME Csusters project
and production inefficiencies, resulting
in them falling into the ‘red list category’,
i.e. the category that indicates the most
polluting industries according to a scale
of three categories established by the
Ministry of Environment, Forest and
Climate Change of the Government of A project visit to a foundry
2) http://fmc.org.in/wp-content/uploads/2012/10/Mapping-Energy-Environment-and-Social-Issues-among-MSME-Clusters-in-India-Way-Forward_upload.pdf 21
3) http://www.switch-asia.eu/projects/msme-clusters/
4) RBI (2015): https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=9018SWITCH-Asia MAG Winter 2017
generally too large for microfinance, The financing schemes quently asked questions (FAQ) booklet5
but too small for commercial banks launched through the project with 51 key points was prepared by the
and open debt markets. This financing project to prepare the MSMEs better to
gap limits the development of MSMEs Based on FMC’s experiences, a large become loan-fit and also to make them
and results in a substantial loss to the majority of micro enterprise owners aware of various financing schemes of
formal financial sector. prefer cash-based transactions to avoid banks and the Government of India.
Below, this problem shall be ana- the payment of taxes, which are of The FAQ booklet was disseminated to
lysed from a three-fold perspective: course an additional cost. However, this more than 1000 MSMEs in the country
on the (1) demand side, most of the incomplete accounting results in a poor and also to various other development
MSMEs are not aware of relevant finan- reflection of their true financial viability organisations and FIs.
cial products, government schemes and in the written account statements
their ability for an improved account- provided to banks along with filed credit 2. Facilitate and strengthen linkages
ing, etc. On the (2) supply side, the applications for green investment pro- between MSMEs and banks and public
bottlenecks include lack of innovative posals. Thus, the banks remain unable schemes: Out of all MSMEs trained, 101
financial products and public schemes to lend to these enterprises. enterprises were coached by six char-
that enable enterprises to switch to To address these problems, the pro- tered accountants (three in Punjab, two
green technology at the same time ject developed a multipronged approach. in Ajmer and one in Howrah cluster),
reducing their operating costs. Besides, Working on both the demand and the who facilitated their financial dealings
local bankers, credit officers and other supply side, it provided the following with their banks.
actors in the (3) credit delivery channels solutions: The chartered accountants provided
are often not trained to understand all 101 MSMEs with overall ‘hand-hold-
the needs of MSMEs regarding wider 1. Organise cluster level sensitization ing’ support (the four-step sequential
sustainability issues. Such differential and awareness workshops and training support mentioned under the previous
factors have hitherto limited the MSME programmes: Four sets of sequential point), which enabled faster loan pro-
owners’ ability to address sustainable services were developed and provided cessing, namely in less than six months
production. to the MSMEs, which were (a) aware- compared to one year on average pre-
ness raising of the MSMEs on financial viously. The total term loans sanctioned
discipline related to loan products and and disbursed to 101 MSMEs for working
processes; (b) identification of bankable capital during the project period were
investment proposals; (c) documenta- EUR 4.02 million and EUR 1.71 million
tion to be provided with loan applica- respectively. Out of the 101 MSMEs,
tions; and (d) follow up with potential 56% have taken loans from banks for
lending banks with assistance from the the first time.
financial consultants. A financial needs assessment for more
For any kind of financial linkage sustainable production was required
development, especially in the MSME for comprehensive understanding and
sector, it is very important to build the factoring of the techno-commercial
capacities of MSMEs in terms of docu- aspects of the targeted businesses.
mentation and awareness creation, and Through this needs assessment, it was
to help them in developing credit disci- understood that the investment return
pline, i.e. maintaining records like cash ratio of the technological improvements
flow, balance sheets, repaying loans in (based on a standard production con-
time. dition) for better practices (costing only
Through seven cluster-level work- expert fees) and partial technology
Photo: MSME Csusters project
shops on capacity building and in- corrections (costing expert fees and
dustry association training on new retrofitting) was highly remunerative,
and modified financial products, 200 whereas a complete technology over-
foundry MSME owners were informed. haul would demand substantially higher
In addition, more than 400 MSMEs were investment.
coached through bilateral meetings by However, a widespread notion in the
New divided blast cupola installed the project team and consultants. A fre- policy segment is that only substantive
22 5) http://fmc.org.in/wp-content/uploads/2012/10/MSME-BOOK-FINAL-1-4.pdfYou can also read
