Financing often a breaking point for sustainable business

circular economy no longer exists

It is well known that SMEs have more difficulty obtaining financing than large companies. SMEs often get lost in all kinds of schemes, financiers and obstacles. But what you hear much less often is that this is much more difficult for sustainable entrepreneurs. And if we want to achieve the Paris Agreements and our economy has to be fully circular by 2050, financing precisely those innovative SMEs will play a crucial role.

Why is it so difficult for sustainable entrepreneurs to get financing? Often they do not fit within the funding criteria. For example, more than half of the circular small companies have difficulty obtaining a loan, while this is only 15 percent for regular companies.

This is because financiers focus on short-term return on investment, while longer lead times apply to sustainable entrepreneurs. For example, they work with business models based on exchange, sharing or leasing instead of selling, which means that the payback period is longer. Banks give them a higher risk profile and so these companies fall by the wayside.

The good news is that the BMKB-Groen scheme has recently been introduced, which makes sustainability easier for smaller entrepreneurs. Very good, of course, but the scheme only applies to energy investments and the energy transition. While the shortages of raw materials and the emissions associated with our enormous use of raw materials also show how important other branches of sustainability, such as the circular transition, are.

If we want to achieve our climate ambitions and circular goals, financial incentives for sustainable entrepreneurs are indispensable. There is a role here for the government and the financial sector. The government can cover risks for financial institutions by, for example, acting as guarantor.

In addition, it must stimulate sustainable investment by abolishing subsidies and discounts for fossil investments and by rewarding sustainable investments. At the same time, the financial sector must take its responsibility and proactively stop investing in fossil fuels – then that money can be used to support sustainable entrepreneurs.

Maria van der Heijden, MVO Netherlands

About admin

Check Also

Government plan to regulate Step scooter sharing senseless as cities look at bans

Government plan to regulate Step scooter sharing senseless as cities look at bans | Dutch …

Bir cevap yazın

E-posta hesabınız yayımlanmayacak. Gerekli alanlar * ile işaretlenmişlerdir