Q&A with Laura Alsenas, Executive Director, Nexus for Development
Q: Why is there a gap in climate finance for SMEs in Asia?
A: Climate finance has grown significantly, but much of it is directed towards large-scale infrastructure projects or corporate sustainability initiatives. SMEs, which play a crucial role in deploying localized climate solutions, often struggle to access the capital they need to scale due to perceived risks and limited financing mechanisms.
Q: How does this funding gap affect women-led enterprises?
A: Women-led businesses face additional challenges, as they often encounter systemic barriers in accessing financing. Despite growing recognition of gender-inclusive investment, gender-focused climate finance remains a niche rather than a norm. The IFC estimates that the global credit gap for women-led SMEs stands at $1.7 trillion, with a significant portion in Asia.
Q: If capital exists, why isn’t it reaching these businesses?
A: The issue is the absence of effective channels to move capital to the right places. Large funders see SMEs as too risky or too small for direct investment. Meanwhile, SMEs need financing that is flexible and tailored to their realities—unlike the rigid structures imposed by traditional lenders.
Q: How does Nexus for Development help bridge this gap?
A: Nexus acts as an intermediary between funders and climate enterprises. Through blended finance mechanisms like the Pioneer Facility, we unlock catalytic capital that helps growth stage SMEs bridge the missing middle gap, create jobs, and scale climate and poverty-alleviation solutions.
Our loans are designed to be accessible and adaptable, ensuring that high-impact businesses, including those led by women, receive the support they need.
Q: What needs to change to make climate finance more effective?
A: We need to diversify climate finance flows. This includes prioritizing smaller, more localized funds that de-risk investment in SMEs; integrating gender-lens investing into climate finance; and building inclusive financial ecosystems.
Q: How can funders and investors contribute to closing the climate finance gap?
A: By working with organizations like Nexus for Development, funders and investors can help create pathways for capital to reach underserved enterprises. Together, we can reshape climate finance to ensure that no innovative solution is left behind due to lack of funding. We are actively looking for new investors to join our roster of existing funders including the UN Environment Programme, UN Women and Vitol Foundation and help us drive more financing to enterprises across Asia.
Q: What is your final message to those invested in climate finance?
A: Climate finance must work for all. We invite partners to collaborate with us in driving equitable, sustainable financial solutions that empower SMEs and women-led enterprises to lead the fight against climate change.
We are fundraising $6 million for new loan capital to support up to 30 additional enterprises in the next 3 years. We are actively seeking like-minded funding partners to join us!