LETTER | Ask Small and Medium Enterprises (SMEs) about decarbonisation, and the response is rarely resistance. It is economics. Tight cash flow, rising costs and thin margins leave little space for upfront green investments. Many turn to government grants to bridge the gap.

But public funds alone cannot carry the transition. If climate action depends solely on subsidies, progress will fall short of national targets. What SMEs need is not more persuasion. They need capital that makes climate solutions commercially viable and scalable.

I saw a glimpse of that at the recent Climate Finance Accelerator Malaysia launch.

What CFA means for SMEs

Funded by the UK government, the Climate Finance Accelerator helps high-potential climate ventures secure private finance. Since 2020, it has supported over 200 businesses, helped close more than 50 deals and unlocked over USD 500 million.

Operating in 10 countries, including Malaysia, CFA addresses one of the biggest obstacles to the green transition: bankability. Many climate projects fail not because they lack impact, but because they lack the structure, financial modelling, or risk mitigation investors require.

While not limited to SMEs, the platform is particularly relevant to them. Smaller firms often lack the track record or technical depth to meet traditional financing criteria. CFA bridges that gap with hands-on financial, technical and inclusion advisory support, turning promising concepts into investment-ready propositions.

The critical role of banks

Banks sit at the centre of this equation. They are the primary providers of capital to SMEs and will ultimately determine the scale and speed of the transition. Yet traditional lending models are built around historical performance, collateral and predictable cash flows. Many climate projects, especially first-of-a-kind or early-stage initiatives, do not fit neatly into that framework.

This is where structured platforms like CFA can make a difference. By strengthening financial models, clarifying revenue streams and mitigating risk, they help translate climate ambition into creditworthy propositions. For banks, that means better visibility, stronger due diligence and lower perceived risk. For SMEs, it opens doors that would otherwise remain closed.

If banks integrate climate considerations into mainstream lending rather than treating them as niche products, green financing can move from the margins to the core of business strategy. Sustainable finance should not be a corporate social responsibility add-on. It should be a growth portfolio.

Projects that attract investments

Capital flows to projects that inspire confidence. To attract funding, a climate project must stand on solid commercial ground. It needs a credible revenue model, clear returns and disciplined execution. CFA helps selected businesses refine exactly that and allows them to pitch directly to investors.

In Malaysia, the current call for proposals is open until March 6. It targets innovative low-carbon businesses at least at the pre-feasibility stage, seeking a minimum of US$5 million in investment. Up to 15 companies from sectors such as green mobility, bioenergy, circular economy, green construction, sustainable fuels, forestry, ecosystem restoration and carbon markets are expected to be selected.

Successful applicants will receive three to four months of tailored advisory support and the chance to present to climate investors in Kuala Lumpur in November. It is not just about access to funding. It is about learning how to structure projects in ways that capital understands.

SMEs are the backbone of Malaysia’s economy. Their participation will determine whether the green transition accelerates or stalls. Private finance platforms like CFA matter because they move climate action from aspiration to execution. With the right structure and investor backing, sustainability stops being a cost and becomes a growth strategy.

Climate ambition is abundant. What we need now is capital that is ready to move. For businesses ready to scale credible low-carbon solutions, the door is open. Applications can be submitted here.

Projects that are not selected in this round will receive constructive feedback, allowing project proponents to refine and reapply in subsequent rounds.

The transition will not be driven by rhetoric. It will be driven by capital, discipline and execution. The solutions exist. The technology is ready. The entrepreneurs are in place.

What remains is straightforward. Will the financial sector act quickly enough to match the urgency of the climate challenge?

The author is a member of the UNFCCC Roster of Experts.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.