A new working group has been launched to improve small and medium enterprises’ (SMEs) access to green finance in Bangladesh, where smaller businesses receive an estimated 1–5% of total green financing despite their significant contribution to industrial activity and employment.
The SME Green Transition Working Group (GTWG), launched by Business Initiative Leading Development (BUILD) in collaboration with the United Nations Capital Development Fund (UNCDF), will work to remove financing barriers, promote cleaner technologies and recommend policy reforms to help businesses adopt sustainable practices.
The group was launched at an inception workshop in Dhaka on Thursday under UNCDF’s Access to Green Finance (A2GF) for Enterprises Programme.
The programme is funded by the Embassy of Switzerland in Bangladesh and implemented by UNCDF, OneTrueValue and LightCastle Partners.
The working group will focus on four areas: finance and incentives; environmental, social and governance (ESG) standards and sustainability reporting; technology and circular economy practices; and policy and regulatory reform.
Ferdaus Ara Begum, chief executive officer of BUILD, said cottage, micro and small enterprises account for approximately 99% of manufacturing enterprises in Bangladesh but face significant barriers to formal financing.
High borrowing costs, complex application procedures and extensive documentation requirements often prevent smaller businesses from investing in resource-efficient technologies and environmentally sustainable production, she said.
The green transition could improve their productivity, competitiveness and resilience, Begum added.
She called for evidence-based recommendations to expand green financing, promote cluster-based decarbonisation and support women-led businesses and enterprises in climate-vulnerable areas.
Sadat Mainuddin, country project manager at UNCDF, said the A2GF programme was already providing green loans at single-digit interest rates.
Although policies and initiatives to support the transition exist, better coordination among stakeholders is needed to make them more effective, he said.
Md Mahbubur Rahman, additional director of the SME and Special Programmes Department at Bangladesh Bank, outlined government financing schemes for SMEs.
He highlighted opportunities to support innovative business models, including rural enterprises led by women, and said the government was willing to help turn promising ideas into viable businesses.
Mohammad Navid Shafiullah, additional secretary at the Ministry of Environment, Forest and Climate Change and chair of the working group, identified six priorities for the green transition: efficient use of water and raw materials, green financing, technology transfer and skills development, market expansion, climate resilience, and coordination and accountability.
He also said the draft carbon market framework was nearing completion and awaiting Cabinet approval.
The ministry had established a governing body to support the development of the country’s carbon market under Article 6 of the Paris Agreement, he added.
Former finance secretary Mohammad Muslim Chowdhury said Bangladesh needed to identify new sources of competitiveness as technology increasingly replaced traditional labour-intensive activities.
He called for better coordination of funds available across different institutions and initiatives to ensure financing reaches businesses investing in sustainable production.
A research presentation by Wasel Bin Shadat, research director at BUILD, identified four major barriers to the SME green transition: limited access to finance, inadequate ESG reporting capacity, difficulties in adopting cleaner technologies and fragmented institutional coordination.
According to figures presented at the workshop, Bangladesh has approximately 11.7 million industrial units. SMEs account for around 99% of them, contribute about 30% of gross domestic product and support approximately 85% of industrial employment.
The presentation also highlighted the Green Transformation Fund’s Tk5,000 crore local-currency window. Of the amount, Tk1,832 crore had been disbursed as of June 30, 2025.
The figures point to the need to assess how existing financing facilities can better serve smaller enterprises, the presentation suggested.
BUILD proposed a 12-month roadmap to address these barriers. It includes piloting a standardised green-investment application template with at least three banks and testing simplified sustainability reporting with 100 micro and small enterprises in one sector.
The plan also proposes energy and resource audits for 50 SMEs in an industrial cluster and a Bangladesh Bank dataset on green finance disaggregated by enterprise size.
Participants recommended simplifying environmental clearance procedures for low-risk businesses, reducing duties and VAT on clean technologies, and expanding concessional finance and technical assistance.
They also called for sustainability reporting requirements proportionate to the size and capacity of businesses.
Ameena Chowdhury, senior programme manager at the Embassy of Switzerland in Bangladesh, urged stakeholders to build on existing institutions and partnerships rather than duplicate previous initiatives.
She called for realistic, time-bound action plans and greater mobilisation of private-sector financing to turn discussions into practical results.
BUILD said the workshop’s recommendations would inform an initial roadmap for 2026–27, outlining priority activities, stakeholder responsibilities, timelines and potential sources of technical and financial support.
The working group aims to strengthen coordination, improve access to green finance and help SMEs adopt resource-efficient, environmentally responsible and climate-resilient business practices.