SWITZERLAND / DUBAI – Trade is an official theme of the 2023 UN Climate Change Conference (COP28) in Dubai, from 30 November to 12 December, signalling trade as a solution to climate change, by addressing its key drivers and mitigating its impact.
The UN small business agency, the International Trade Centre (ITC), will bring the voice of small business to the trade and climate discussions. Small businesses make up 90% of all companies and two-thirds of jobs worldwide, yet their perspectives are often not included in policymaking.
Agriculture, for example, is particularly vulnerable to climate change and is also a major source of greenhouse gas emissions. Smallholder farmers provide one-third of the global food supply, a figure that can go as high as 80 percent in some countries, yet their concerns and ideas are not reflected in crafting the legislation that impacts them.
Tackling climate change through small businesses
Small businesses know they need to make the low-carbon transition – and are willing to do so – but many are unable to act, according to ITC research. They lack information, skills, technology and financing. On financing, only 1.7% of climate finance goes to small-scale farmers in developing countries, although they are among the most vulnerable.
‘Small businesses in developing countries need two things to make the low-carbon transition – capacity and capital,’ said ITC executive director Pamela Coke-Hamilton. ‘Some are already taking action, by using renewable energy sources, reducing waste, and creating biodiverse products and services. More small businesses need to be equipped with the skills and financing to make those changes and to scale their solutions, and we’re here to help.’
ITC will bring a delegation of small businesses and business support organizations to share their scalable solutions and best practices with COP28 negotiators and participants. They include a Peruvian biodiversity-conscious food and cosmetics company (Shiwi), a Moroccan cooperative of 600 artisans that uses technology to reduce carbon emissions along supply chains (Anou), a Barbadian sustainable agrotourism company (Coco Hill Forest), an Egyptian coffee waste management company (Cupmena) and a South African textile upcycling business (Sari for Change).
Co-hosting the COP28 Trade House
At COP28, ITC will co-host the first-ever Trade House pavilion alongside three international organizations – the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD) and the International Chamber of Commerce (ICC) – where discussions will showcase trade-led solutions to accelerate the transition to a low-carbon economy, in a way that does not leave anyone behind.
At the Trade House, ITC will highlight the role of small businesses, especially those led by women, young people, Indigenous Peoples and members of marginalized groups, in driving sustainable change.
More information on ITC’s COP28 activities is on the ITC COP28 landing page.
Small businesses hard hit by conflict, instability: SME Competitiveness Outlook
The flagship report of the International Trade Centre (ITC), SME Competitiveness Outlook 2023, released November 29, 2023, reveals that small businesses can take action to survive and grow in fragile, conflict-affected contexts.
Small businesses make up 90 percent of all businesses in fragile settings – and when they survive, they provide many of the jobs, goods and services needed to meet basic societal needs.
Beyond survival, when set on a growth trajectory, they are more likely to help sustain long-term stability and security of a country. This matters, as the world is becoming more fragile; 86 percent of the world’s poor could be living in fragile states by 2030. Fragility threatens livelihoods now and increasingly, spills across borders.
Competitiveness as a coping mechanism
Though most businesses are hard hit by fragility, the impact hits small firms, informal businesses, women and young people hardest. For example, 34 percent of small businesses are intensely affected by fragility, compared to 18 percent of large firms.
A new ITC report, Small Businesses in Fragility: From Survival to Growth, shows that businesses can prioritize three actions to survive and grow: stay connected with institutions, buyers and other businesses; improve financial management; and retain skilled staff.
It unveils the new ITC Fragility Exposure Index, which measures fragility at the firm level, based on a survey across eight countries. The index shows that 35 percent of small businesses that engaged with business support organizations hired employees – a positive sign of growth – in fragile settings, versus just 14 percent of small businesses that grew without such connections.
Strong internal financial management is another characteristic that can help lessen the impact of fragility on a business. Survey results show that companies that keep records of all business and financial transactions were twice as likely to report employee growth.
Finally, 41 percent of enterprises with an established hiring process expanded their labour force in fragile contexts, versus 31 percent of businesses that were able to do so without strong hiring practices. The employees were also more likely to have the right set of skills, which matters, as skilled workers are more efficient at adapting operations to new contexts, allowing firms to continue operating in periods of instability.
Addressing fragility: Bottom up, top down
Helping firms cope with the prevailing state of fragility is not enough. The report finds that under extreme violence, competitiveness ceases to protect firms – and can even expose them to threats such as violence and extortion.
A two-pronged approach can help address the root causes of fragility, one in which both small businesses and governments have critical roles to play. Governments and development partners can ensure enterprises have access to the hard and soft infrastructure they need to continue operations, reduce red tape related to paperwork and processes, and promote clear and consistent rules and modes of operating.
In parallel, small businesses can learn to adapt to changing circumstances, forge deeper relationships with partners, and adopt new ways of working that make them more competitive both locally and internationally.
Only by working together can the foundations of inclusive, sustainable growth be rebuilt, and pave the way for a more stable future.