COP31 Lenders Show Green SME Finance Works but Struggles to Scale

Development lenders at COP31's Finance and Trade Day on Nov. 13, 2026, showed that financing small businesses' green transitions can work, from a $7 billion export-credit program to a $12 million trade finance pilot. A second panel turned to the rules that decide who can sell into carbon-conscious markets, where Türkiye and Pakistan warned that Europe's carbon border measures could squeeze their small exporters. Neither session took formal action, but both mapped where climate pledges stall: the cost of capital and the cost of compliance.

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• $7 billion mobilized by Turk Eximbank through supplier on-lending for transition finance
• Green Climate Fund put $378 million into EBRD's $1.5 billion green facility
• ITC launched a $12 million pilot of a planned $250 million SME facility
• ISO and GHG Protocol co-creating a single carbon accounting playbook
• Pakistan and Türkiye warn overlapping EU and UK carbon border rules burden SMEs

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Small Business Climate Finance: Models That Work

The basics: NDCs, or nationally determined contributions, are each country's climate pledges under the Paris Agreement. SMEs are small and medium-sized enterprises, the suppliers and producers that make up much of developing economies.

Why it matters: Capital costs two to three times more in developing countries, and SMEs often lack the collateral lenders demand. With two-thirds of NDCs dependent on finance and capacity conditions, whether these lending models scale will decide whether many climate pledges get implemented.

Where things stand: The first panel, moderated by Chantal Line Carpentier, Head of Trade, Environment and Climate Change at UNCTAD, walked through four approaches already in the field.

Turk Eximbank, Türkiye's export credit agency, passes on-lending through to suppliers to finance their transitions. "We were able to mobilize at least $7 billion of funds," said a Turk Eximbank panelist.

Uganda Development Bank has set aside about 20% of its capital for SMEs, women and youth, backed by guarantees. The guarantees address the collateral gap that keeps many small borrowers out of commercial lending.

The International Trade Centre (ITC) described a $12 million pilot of a planned $250 million SME Trade Finance Facility it is developing with the UN Capital Development Fund (UNCDF). The pilot is about 5% of the facility's target size.

The Green Climate Fund (GCF) described its $378 million contribution to the European Bank for Reconstruction and Development's $1.5 billion Green Economy Financing Facility. That means GCF money covers roughly a quarter of the facility. GCF also described synthetic local currency lending in Uzbekistan, which lets borrowers repay in their own currency rather than in dollars or euros.

The other side: A youth negotiator on the panel pushed back on the success stories. The negotiator stressed persistent gaps in access and warned that climate finance remains heavily weighted toward debt, which adds to the burden on already-indebted countries and businesses.

Decisions and stakeholder impacts: No votes were taken. The panel agreed that proven models exist but need to scale. Export-oriented suppliers in Türkiye and women- and youth-led businesses in Uganda already benefit, while SMEs in countries without such programs remain on the outside.

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Currency Risk and Greenwashing: The Scaling Problem

Why it matters: When loans come in hard currency, exchange-rate swings shift risk onto small borrowers who earn in local money. GCF's screening process, meanwhile, decides whether climate dollars reach real climate action.

Where things stand: Panelists named four levers for scaling:

• Solutions to currency risk
• Direct access to funds
• Investment readiness
• Private capital

GCF reported more than 160 accredited direct access entities. These are national and regional institutions that can draw GCF funds without routing through large international intermediaries. GCF also explained its accreditation and multi-stage review process, which is designed to screen out greenwashing, meaning projects that claim climate benefits they do not deliver.

The other side: Carpentier raised a warning that bridged into the day's second panel. She said compliance costs from the EU's Carbon Border Adjustment Mechanism (CBAM) and similar measures are raising trade tensions. CBAM puts a charge on the carbon embedded in certain imports into the EU.

What's next: No formal commitments came out of the session. The test is whether direct access and local-currency tools grow beyond pilots and single-country deals.

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One Carbon Accounting Playbook: Standards Bodies Converge

Why it matters: When countries and industries measure emissions differently, exporters must document the same product several ways for several markets. Panelists said this creates disproportionate compliance costs and trade friction, and the burden falls hardest on smaller firms.

Where things stand: The second panel, moderated by a World Trade Organization moderator, opened by acknowledging fragmentation. "There is a diversity of approaches," the moderator said.

The International Organization for Standardization (ISO) said it is co-creating a single carbon accounting playbook with the GHG Protocol, the most widely used corporate emissions accounting framework. Bringing the two under one methodology would reduce the duplicate reporting companies now face.

The OECD's IFCMA is examining carbon intensity metrics, data sharing and verification. These are the technical building blocks governments would need to compare one another's carbon rules.

Responsible Steel said its Steel Standards Principles have 67 endorsers. It also has memoranda of understanding with LESS and C2F. Steel is one of the most carbon-intensive traded goods and is directly exposed to carbon border measures.

Decisions and stakeholder impacts: Panelists proposed mutual recognition, under which one jurisdiction accepts another's standards as equivalent, as a path to interoperability. No formal agreement was announced. Steelmakers and large exporters stand to gain most from convergence. Exporting governments gain leverage if mutual recognition takes hold.

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Türkiye, Pakistan Sound Alarm on Carbon Border Rules

Why it matters: Pakistan sends 60% of its textile exports to the EU. Speakers said compliance timing under carbon border rules could wipe out small producers.

Where things stand: Representatives from Türkiye and Pakistan said overlapping carbon border measures from the EU and the United Kingdom burden SMEs. Both countries are major exporters to Europe. The discussion also touched on the EU Green Deal and GSP+, the EU trade preference program through which Pakistan sells into European markets.

Their asks were consistent:

• More time to comply
• Capacity building for affected businesses
• Dialogue between exporting and importing governments

The other side: The record does not include a direct response from EU or UK representatives. The standards panel's push for mutual recognition and a single accounting playbook amounts to a partial answer, since it would lower the cost of proving compliance even if the rules stay in place.

Decisions and stakeholder impacts: No decisions were made. Small textile producers in Pakistan and SME suppliers in Türkiye face the most immediate exposure. Larger firms with the resources to track and report emissions are better positioned.

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Minor Items

• Coalition to Grow Carbon Markets released a policy playbook with eight levers; the coalition has 16 member countries.
• Zhu Ji, President and CEO of Energy Foundation China, joined the first panel on scaling finance for NDC implementation.

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Looking Ahead

Both panels were discussion-only, so nothing binding emerged. The concrete markers to watch are whether ITC's $12 million pilot grows toward its $250 million target and whether the ISO–GHG Protocol playbook is released. The other open question is whether calls from Türkiye and Pakistan for more time and dialogue on carbon border rules get a formal response.