The Climate Investment Funds (CIF), the European Bank for Reconstruction and Development (EBRD), and the Green Climate Facility (GCF) bring transformative change to the country.
When we think about which companies are mostly responsible for carbon emissions, we tend to focus on the large ones. However, while such corporations play a crucial role in mitigating carbon emissions, small businesses can also have a significant impact.
By accessing the necessary financial support, they can contribute to tackling the climate crisis, paving the way for transformative change within a country.
A study by the SME Climate Hub found that small businesses want to help tackle the climate crisis but lack finance and knowledge; 70 per cent of respondents reported needing funds to take action or speed up progress with their emissions reduction efforts.
By making funds easily accessible, small businesses can kick start climate-friendly initiatives, such as adopting renewable energy solutions, improving energy efficiency, and investing in sustainable production processes.
This is exactly what the European Bank for Reconstruction and Development (EBRD), the Climate Investment Funds (CIF) and the Green Climate Fund (GCF) are promoting in Armenia.
“Small actions on a local level add up and actually have a bigger impact,” explains Ksenia Brockmann, EBRD Head of Green Financial Systems for Caucasus, Central Asia and Türkiye.
“When small businesses actively engage in climate action, the collective impact can be transformational for Armenia. They contribute to the country's commitment to international climate agreements and demonstrate responsible stewardship of the environment.
“Moreover, reducing carbon emissions and adopting sustainable practices can lead to improved energy efficiency, cost savings and enhanced competitiveness for businesses. This, in turn, helps create a positive cycle of economic growth, job creation and increased investor confidence. This domino effect has the potential to build positive momentum across many business sectors,” she adds.
Since 2018 and under its Green Economy Financing Facility (GEFF), EBRD has approved more than US$ 37 million for on-lending to local micro, small and medium-sized enterprises (MSMEs) in Armenia, to help them invest in energy efficiency, renewable energy and resource efficiency improvements.
One of the businesses that has benefited from the GEFF programme is Avan Marak Tsapatagh Hotel. Its deputy director, Hovhannes Poghosyan, is more than pleased with the funds that were made available, as it enabled them to build a small solar park next to the hotel. “Thanks to our new solar station, we can save about 45 per cent on our energy costs. Building the solar power plant solved several problems for us. The first one was profitability and another one was safety – the risk of fires.”
To act as incentives to Armenian businesses, the GEFF is supported with non-refundable co-investment grants of up to US$ 5.25 million, made available by CIF, for investments in selected technologies by participating MSMEs.
“GEFF in Armenia is one of our most successful programmes,” explains Ksenia Brockmann. “Our partner financial institutions have disbursed close to 350 loans to MSMEs, which has helped save 130,915 MWh of energy and reduce more than 30,220 tonnes of carbon emissions annually.”
But it is not just about finance. According to the same survey from the SME Climate Hub, a lack of climate skills and knowledge is preventing 58 per cent of respondents from taking more ambitious action. This is why the GEFF programme goes beyond providing simple lines of finance. An experienced team of bankers and technical programme managers ensures consistent quality and innovation in the GEFF product and service delivery. In addition, advisory services are available to help participating financial institutions and their clients enhance their market practices.
The GEFF programme operates through a network of more than 170 local financial institutions across 28 countries, supported by more than €5 billion of EBRD finance. More than 218,000 investments have led to a reduction of over 9.5 million tonnes of CO2 emissions a year, which is the equivalent of around one trillion smartphones being charged.
EBRD and CIF have been partners since 2008, delivering concessional finance to support sustainable energy solutions, such as district heating, energy efficiency, renewables, waste processing, as well as climate resilience measures.