Sustainability and MSMEs

For most large firms in Latin America and the Caribbean, MSMEs represent an important client segment or a large share of stakeholders in their value chain —be it as suppliers, distributors, retailers, etc.

In the region, MSMEs represent the lion’s share of businesses and employment, as they represent 99% of businesses and 67% of employment. Therefore, they are among the strongest drivers of economic development. However, despite their potential, MSMEs in the region tend to stay small and are significantly less productive than large firms.

One of the biggest challenges for MSMEs is the lack of accessible, adequate, and affordable financing that prevent them from growing, increasing productivity and competitiveness, and from investing in innovation —including their capacity to embrace digital solutions—. Another challenge relates to SMEs' capacity to adopt sustainable practices increasingly requested by large firms as they seek greater transparency and accountability in their own sustainability efforts. SMEs don’t always have the relevant knowledge, human resources, or financial capacity to invest in these issues, risking their competitiveness and integration into larger regional or global value chains.

We believe that by adopting sustainable practices, models and mindsets, these companies will be better placed to drive innovation, deepen markets, enhance competitiveness, strengthen supply chain resilience, and diversify their sources of investment. Now more than ever, the need for companies to have solid sustainable business models has become evident as it determines the resilience and likelihood of survival to economic shocks, especially in its value chain, while addressing inter-linked and material challenges around climate change, social inclusion, and prosperity as a whole.