“Although environmental investing and entrepreneurship in emerging markets has undergone a transformation from a nascent concept to a burgeoning market over the past decade, clear challenges to greater growth remain. How do institutions collectively move from a retail approach – each institution supporting companies one by one – to a wholesale approach – truly developing an ecosystem of support for environmental SMEs in emerging economies? In other words, how do we get to scale so that these enterprises collectively are having real positive environmental impacts at a large scale?
We still need to examine the bottom line and address models that demonstrate savings, increase profits, and increase market access, but many believe that the case has been made for whether “environmental” companies have economic viability. “The conversation is not whether or not these companies are viable, as was the case ten years ago. We’ve seen that they generate profits, can grow, and are a good business investment. Now the question is: how can we multiply them?” Ros said.
Investment into environmental and social businesses is growing – many investors are pouring capital into emerging markets, and GDP growth rates of NV countries continue to grow. However, for environmental entrepreneurship to get to scale, there must be three conditions fulfilled, as in all other markets: there must be robust demand from investors for a pipeline of environmental enterprises, a promising supply of enterprises ready for investment, and solid transactional infrastructure to enable these investments.
In order to highlight the development of these three necessary conditions, NextBillion will be featuring a series of articles over the next twelve months, in addition to this introductory piece, to stimulate discussion around environmental entrepreneurship, with a focus on SMEs and emerging markets. Several authors will post monthly articles about growing the market conditions for environmental SMEs around these three main topics: supply (of companies), demand (with regards to investment capital) and infrastructure (i.e. exchange platforms and metrics).”