Micro, small and medium enterprises (MSMEs) continue to face significant hurdles in understanding how climate change affect their operations, and still need extensive help to build resilience at the local level to ensure profitability and continuity, according to a recent study.
The paper found that despite a number of public and private initiatives to promote the climate resilience of businesses, implementation of concrete measures on the ground remains a major challenge.
MSMEs are held back by issues such as constrained resources, a lack of capacity and information to understand and manage climate risks, insufficient financial savings to fall back on during crises, lack of funds to purchase insurance, and limited access to credit to invest in risk reduction measures.
The study published by the Organization for Economic Co-operation and Development or OECD underscored the varied ways MSME resilience can be improved, one of which is by enhancing the resilience of communities and local economies where these enterprises are based.
Local-level institutions and networks play important roles in planning and implementing concrete measures to build climate resilience that are a fit to local needs and capacities, it added.
“Making MSMEs resilient therefore requires empowerment of the local government units who implement and enforce the necessary policy measures, and local networks that foster collaboration for related initiatives by public- and private-sector actors,” the OECD document entitled “Lessons on engaging with the private sector to strengthen climate resilience in the Philippines” said.
Such multi-sectoral networks of public and private sector actors, academia, civil society organizations, and religious institutions can create an “ecosystem” of top-down and bottom-up institutional arrangements and initiatives to bolster MSMEs’ climate resilience.
Among these is the MSME Resilience Core Group (RCG), one of the most prominent public-private networks that develop national-level strategies for MSMEs’ resilience. Another public-private network playing a key role is the National Resilience Council, which supports science- and technology-based capacity development at the local level, complementing the strategy-focused activities of the RCG.
For their part, the local chambers of commerce can complement national-level institutions such as the Philippine Chamber of Commerce and Industry and the Philippine Disaster Resilience Foundation to enable greater outreach to local MSMEs and collaborate with LGUs and other local business networks to provide business resilience training.
Academia and research institutions can also help by giving support to evidence-based development of policies and programs at both national and local levels. They can help capacitate local disaster risk reduction and management (DRRM) officers and community members as well as MSMEs to use available hazard maps, early warning systems, and other DRRM and resilience-related tools.
Meanwhile the paper also recommends further strengthening LGU capacity to implement and enforce existing regulatory measures such as land-use management and environmental protection to incentivize the private sector to engage in and allocate funding for climate resilience activities.
Business permitting processes may likewise provide another opportunity for government bodies, in collaboration with LGUs, to integrate climate resilience considerations into business permits.
Further, the paper said promoting policy reforms that integrate informal micro and small businesses into the formal sector can enable MSMEs to benefit from formal support mechanisms boosting climate resilience.
Such support may include subsidies for certain technologies that are aimed at MSMEs’ resilience and training on business continuity management, among others.Another proposal is to link the Green Jobs Act with the policies on MSME development and climate resilience.
The Green Jobs Act can provide a good basis for promoting private-sector engagement through identifying business opportunities emerging from the need to manage climate risks.In addition, there is a need to improve how local MSMEs engage in policy dialogue and project development on climate resilience at the local level.
“For instance, a more streamlined procedure for MSMEs to participate in Local DRRM Council meetings could facilitate closer exchange between the Council and MSMEs about the climate hazards they face, their support needs, and broader business circumstances that affect their vulnerability to climate change,” the report said.
Also recommended is helping MSMEs better organize themselves to coordinate more effectively with LGUs and regional offices of the Philippines Atmospheric, Geophysical and Astronomical Services Administration to access weather and climate data and information, and translate these into practical actions.
