Environmental Policy Toolkit for Greening Smes
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22-23 March 2016 Chisinau, Moldova Environmental Policy Toolkit for Greening SMEs in the EU Eastern Partnership countries Pre-publication of the Second Edition FOREWORD – 3 Foreword Reducing the environmental impact of small and medium-sized enterprises (SMEs) in both manufacturing and services is a key success factor in greening the economy. Improving the environmental performance is also a significant business opportunity for SMEs themselves as important suppliers of goods and services. However, the willingness and capability of SMEs to adopt sustainable practices and seize green business opportunities generally face size-related resource constraints, skill deficit and knowledge limitations. SMEs are often unaware of many financially attractive opportunities for environmental improvement. There is a widespread misperception that protecting the environment is associated with technical complexity, burdens and costs. Even when they are aware of the potential of better environmental performance to improve a firm’s competitiveness, a lack of appropriate skills and expertise commonly prevents firms from acting upon win-win opportunities. At the same time, the lack of resources often leads to SMEs being risk-averse and less willing to invest in new technologies, partly because of the uncertainly about the payback period. The objective of this Environmental Policy Toolkit for SME Greening is to help governments in the European Union’s Eastern Partnership (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) to design and implement key instruments to promote environmental compliance and green business practices among SMEs using the existing good practices in EU and other OECD countries. It has been developed within the framework of the initiative “Greening Economies in the Eastern Neighbourhood” (EaP GREEN) funded primarily by the European Commission (EC) and implemented by the OECD in partnership with the UNEP, UNIDO and UNECE. Besides key government stakeholders (first of all, ministries of environment and economy), the target audience of this document includes business associations as well as non- governmental and academic institutions in EaP countries. The Toolkit focuses predominantly on environmental policy instruments to promote green behaviour of SMEs. It covers three categories of instruments: regulatory simplification and incentives, information-based tools (which comprise both providing advice and guidance to businesses and providing their customers and the public at large with information about their green practices), as well as financial and economic incentives. These instruments should be complemented by appropriate industrial development, regional development and science and technology policies that lie outside the scope of this Guide. The Guide draws on the past OECD analysis on SME-related policies, the extensive work that the EC has done to implement the 2008 Small Business Act for Europe, as well as other relevant literature. Annexes to the Toolkit present guidance documents on specific instruments elaborated within pilot projects in Armenia, Georgia, Moldova and Ukraine. While targeting the respective countries, they are also applicable to other EaP countries. The lead author of this Toolkit is Eugene Mazur of the OECD Environment Directorate. The important contributions of Nataliya Batarina and Vladimir Morozov, review and comments by Krzysztof Michalak, and editorial support of Irina Belkahia and Lupita Johanson are gratefully acknowledged. ENVIRONMENTAL POLICY TOOLKIT FOR SME GREENING IN EU EASTERN PARTNERSHIP COUNTRIES – SECOND EDITION © OECD 2016 TABLE OF CONTENTS – 5 Table of contents Acronyms ................................................................................................................................................... 9 Executive Summary ................................................................................................................................ 11 Improving regulation of SMEs with low environmental risk ................................................................ 11 Providing information, advice and guidance ......................................................................................... 12 Recognising green practices .................................................................................................................. 13 Offering financial incentives ................................................................................................................. 14 Sending right market signals ................................................................................................................. 14 Building institutional partnerships ........................................................................................................ 14 Chapter 1. SME Greening: Opportunities and Challenges ................................................................. 17 Definition of SMEs ............................................................................................................................... 18 Role of SMEs in greening the economy ................................................................................................ 19 Obstacles to improving environmental performance of SMEs ............................................................. 20 References ................................................................................................................................................ 24 Notes ......................................................................................................................................................... 24 Chapter 2. Current Environmental Policies Targeting SMEs in EaP Countries .............................. 25 Regulatory regimes ............................................................................................................................... 26 Existing policy incentives ..................................................................................................................... 27 Current implementation of green practices ........................................................................................... 28 Technical and financial support for green practices .............................................................................. 29 Institutional challenges .......................................................................................................................... 31 References ................................................................................................................................................ 33 Notes ......................................................................................................................................................... 33 Chapter 3. Regulatory Tools ................................................................................................................... 35 Simplified permitting and general rules ................................................................................................ 36 Better regulation initiatives for small businesses .................................................................................. 38 Incentives for environmental management certification ....................................................................... 39 Sectoral approach to compliance assurance .......................................................................................... 40 References ................................................................................................................................................ 41 Notes ......................................................................................................................................................... 41 Chapter 4. Information-based Instruments .......................................................................................... 43 Advice and guidance ............................................................................................................................. 44 Designing effective messages ............................................................................................................ 44 Proactive information dissemination ................................................................................................. 47 Web-based guidance tools ................................................................................................................. 48 Direct capacity building ..................................................................................................................... 51 Recognition of green practices .............................................................................................................. 53 ENVIRONMENTAL POLICY TOOLKIT FOR SME GREENING IN EU EASTERN PARTNERSHIP COUNTRIES – SECOND EDITION © OECD 2016 6 – TABLE OF CONTENTS Simplified environmental management systems ............................................................................... 53 Sector-specific green certifications .................................................................................................... 55 Eco-labels .......................................................................................................................................... 56 Environmental recognition awards .................................................................................................... 58 References ...............................................................................................................................................