As a crucial driver for innovation and sustainable development, entrepreneurship plays a vital role in growing solutions to mitigate and adapt to climate change. They are especially significant in developing Southeast Asian economies, where micro, small and medium enterprises (MSMEs) contribute up to 97% of national employment in the region.
Last August, ANDE held a virtual report launch for our first Southeast Asia Climate and Environmental Entrepreneurial Ecosystem Snapshot. With support from the Australian Department of Foreign Affairs and Trade and in partnership with the Stockholm Environment Institute, this report evaluates the current support ecosystem for climate and environmental entrepreneurs in Cambodia, Indonesia, Myanmar, the Philippines, Thailand, and Vietnam. Watch the full event recording and read some highlights below.
1) Innovative financing models may be our best bet to climate action
Despite the emergence of innumerable solutions to tackling the “existential threat” that climate change brings, there is yet to be a clear answer on how the majority of them will be paid for. While there is growing traction in climate investments, these solutions often involve new technologies, practices and markets, where many risks continue to hold back perpetual financing in this space.
So, how might we best fund climate mitigation and adaptation? A viable answer to this trillion-dollar question may lie in innovative financing models. Blended finance, as well as climate finance, have gained increasing attention to pioneer investments in climate action due to their mobilization of both public and private resources through various de-risking instruments. Consequently, greater interest can be drawn to developing regions such as Southeast Asia, allowing local climate and environmental businesses to receive more commercial investment.
2) Awareness is not a policy
Just as investments alone will not lift people out of poverty, the mere recognition of the climate threat does not translate to action in addressing it. Southeast Asian countries have been stepping up their commitments as the effects of climate change becomes more evident. Yet, our survey data revealed unsupportive regulatory environments as a top challenge for climate and environmental entrepreneurs in the region.
Awareness and climate commitments are powerful and necessary starting ingredients that must be turned into robust action to complete the recipe. Enabling policy frameworks, laws, or legislation – such as Thailand’s plastic bag ban or the Philippines’ Energy Efficiency and Conservation Act – are vital to mainstream climate considerations into national development plans and reduce barriers for climate entrepreneurs. However, policymakers still have a long way to go to transform commitments into tangible measures. With countries endorsing international climate treaties and development agendas, stakeholders may leverage their reporting component to hold governments accountable to their pledges and call for more action.
3) A sustainable climate transition must be inclusive
Although it is widely acknowledged that those least responsible for climate change are often on the receiving end of its effects, local actors rarely have their say on the decisions that will most affect them. This is especially true for a region of widening development gaps such as Southeast Asia.
The pivotal role of climate and environmental entrepreneurs in building green, localized and inclusive economies should be recognized as governments journey from plan to action. There is an opportunity for support organizations to help shift the status quo from dominantly top-down approaches to a framework that will equip communities with greater power and resources to build climate resilience. Additionally, supporting women, young people, and rural and indigenous communities in developing climate and environmental solutions could unlock further expansion and innovation in the region.
4) Share what works (and what didn’t)
The relatively nascent climate and environmental entrepreneurial ecosystem in Southeast Asia present both a challenge and an opportunity. In our report, many support organizations noted that documentation of successful climate business models remains scarce. Consequently, there is a knowledge gap on effective and replicable methods to strategically combine sustainability, innovation, and management practices into a profitable business model.
Nonetheless, a newly developing ecosystem also offers a realm of possibilities and learnings to be shared. As climate entrepreneurship garners interest, lessons shared through stories and case studies can provide further inspiration and insights. Ultimately, having knowledge that is equally accessible to all can prompt new perspectives and highlight entry points to accelerate and strengthen this important ecosystem.
5) Numbers as a universal language
Impact measurement is particularly significant for climate and environmental entrepreneurs seeking to attract impact investors, supporters, and customers interested in green products or services. Numbers act as a universal language to communicate the enterprise’s value proposition and whether its products or services truly benefit the environment and society.
As our research shows, there is no one-size-fits-all approach to impact measurement. Such frameworks can vary across programs and sectors, where it can become difficult to select the most suitable and affordable one to use. Thus, rather than going for a standard, supporting climate entrepreneurs with the resources to develop an impact measurement framework tailored to their needs could be more effective in helping their businesses scale.
6) Mind the gap, then fix it – together
There are many ways to take action in the fight against climate change, but one thing is certain – collaboration is at the heart of the agenda. While each actor – entrepreneurs, the private sector, academia, international organizations and governments – all have a unique and essential role, working together is compulsory when there is so much to do and so little time.
Strong partnerships across sectors will be necessary to meet the Paris Agreement targets and the UN Sustainable Development Goals. For example, IKEA Foundation and The Rockefeller Foundation recently joined forces to launch a USD 1 billion global initiative to catalyze investments in renewable energy and help developing economies transition to clean power. When great collaborations occur, progress radiates, taking us one step closer to achieving true impact.
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There is a diminishing window of opportunity to limit the global warming level to 1.5°C within the next two decades.
Is it even achievable? Yes, this ambitious target is still narrowly possible, but reductions in greenhouse gas emissions will need to be immediate and rapid. Indeed, the real question should be whether the world can afford not to act.
The making of the Southeast Asia Climate and Environmental Entrepreneurial Ecosystem Snapshot has highlighted to ANDE the inspiring climate action by entrepreneur support organizations in the region – and we hope to support this as best we can. Up next, please keep an eye out for our Climate Entrepreneurship Learning Lab launching in 2022. Reach out to Ploy if you would like to talk about collaboration or if there are any particular topics you would like us to cover.