Playing its part in a global crisis, Nepal rises to the climate-change challengeGlobal solutions anchored in local experiences are crucial to support businesses around the world.
Tackling climate change is now top of the agenda in Nepal, where changes in the monsoon patterns could result in floods and landslides and even drought, forest fires and dangerous snowmelt.
Science tells us that we must halt burning carbon-based fuels to arrest global warming. The stark truth is that based on current growth trajectories and climate policies, the world will exhaust its carbon budget in the next eight years, and we will exceed the Paris Agreement target to level pre-industrial temperature rises to 1.5 degrees Celsius. Against this alarming backdrop, the challenge is to quickly move to solutions that may include a decoupling of economic growth from greenhouse gas emissions.
Recently, climate change was the talk of Davos, and the role of big business came under scrutiny. But what does a carbon-free future hold for the smaller companies that account for about half the GDP and anchor three out of every five jobs in developing countries such as Nepal?
Micro, small and medium-sized enterprises (MSMEs) in developing countries are drivers of much-needed jobs and prosperity but are weak in responding and adjusting to risks, including climate change effects. Yet no effort to tackle this global crisis can be complete without making small businesses a part of the solution.
The extent to which the impact of trade on the environment is positive or negative depends on how national and international environmental policies are designed and enforced. After all, we must accept that, historically, poor countries are responsible for only a small share of the causes of climate change and environmental degradation.
According to the OECD, low-income countries, most of them in sub-Saharan Africa, contribute to only 1 percent of total global emissions. However, they will be the ones severely affected by climate change.
Trade can both help and hinder this process depending on the kind of policies crafted and implemented. Trade can help shift environmentally cleaner technologies to small businesses in developing countries. But trade barriers or even standards which may have positive aims but don't take into account the impact on small suppliers can be counterintuitive to a sustainability agenda.
There is an increasingly persuasive case emerging that increasing the access that smaller businesses have to international trade has a crucial role to play in the transition to a greener, more sustainable economy.
Building infrastructure to support sustainable production and introducing regulations to incentivise businesses to innovate and supply green products are just some of the policies that can support small businesses to contribute to a greener economy. And improving access to finance and widening access to technical and managerial skills to pursue eco-innovation can help small businesses adopt green production methods.
The International Trade Centre, which is the joint development agency of the World Trade Organization and the United Nations focused on building MSME competitiveness, has found that, once the case for climate mitigation is clear, smaller businesses were quick to invest in new measures.
And private-sector initiatives can achieve scale with supportive policies that open markets for clean technologies, allow companies to sell overproduction of renewable energy to the grid, and provide tax incentives. On top of national policies, an essential part of the solution is addressing international trade barriers for environmental goods or services.
Some countries are beginning to use trade agreements to achieve such complementary aims. The Agreement on Climate Change, Trade and Sustainability between Costa Rica, Fiji, Iceland, New Zealand and Norway, eliminates barriers to trade in environmental goods and services, phases out fossil fuel subsidies and promotes voluntary eco-labelling programmes.
But such agreements between a few partners, while welcome, are no substitute for a global approach to a global problem. Global solutions anchored in local experiences are crucial to support businesses around the world, especially in developing countries, to be able to comply with requirements resulting from new environmental measures, such as those that potentially arise from the European Union’s new Green Deal.
One way to help do this is to build local expertise and create interdisciplinary networks so that small businesses in developing countries can create and implement climate-resilient and zero-carbon practices.
That’s why ITC has set up, with Nepal’s government, a Trade for Sustainable Development Hub, which was launched this week in Kathmandu. It is one among a global network of such facilities that can not only help businesses to identify, develop and implement climate-resilient measures but also to focus on climate financing, expertise and technology.
As well as the launch of Nepal’s hub, ITC, the government and European Union partners are pleased to announce a new raft of assistance to small businesses to find markets in the European Union (EU).
The project, known as EU-Nepal Trade-Related Assistance: Facilitating Increased Trade and Participation in Coffee and Pashmina Value Chains, will be implemented by ITC in partnership with Nepal’s Ministry of Industry, Commerce and Supplies.
Building on ITC’s long experience in providing trade-related technical assistance in Nepal, the project will contribute to the country’s development efforts—and its goal of graduating from the least developed country category in the near future.
These initiatives, with Nepal’s small businesses in mind, show that the country is rising to the challenge posed by climate change and backing trade-led sustainable economic growth.
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