The silent adapters: Uncovering the resilience of smaller firms in developing countries

This report examines how micro, small, and medium enterprises (MSMEs) in emerging market and developing economies (EMDEs) are adapting to climate change. Focusing on 46 countries and using data from over 20,000 firms in the World Bank Enterprise Survey (WBES), the study analyzes the prevalence, measurement challenges, and financing mechanisms of adaptation. 

Key findings show that adaptation by MSMEs is significantly underreported but much more common than previously assumed, even among micro firms. Around one in five micro and one in three small firms undertake adaptation measures, with higher numbers in regions that face greater climate risks. Financing is identified as a major constraint: firms with access to external finance, like bank loans or trade credit, are 16–20 percent more likely to implement adaptation measures. The authors recommend addressing barriers in standardization, regulation, capacity, and technology, and emphasize the need for banks, development finance institutions, and policymakers to use MSME-specific adaptation finance typologies to better identify adaptation demand and structure appropriate financial products, in order to scale adaptation efforts and close the large adaptation finance gap in EMDEs.