It is widely acknowledged that a bottom-up approach actively involving businesses and stakeholders on the ground in emerging and developing countries is essential for driving climate change adaptation finance as local companies and communities are directly affected by climate change.

Small- and medium-sized enterprises (SMEs), which should focus primarily on their own adaptation while also having the potential to offer products or services that can help their clients and partners adapt to climate change, are crucial stakeholders in this context. They often play a dominant role in the private sector in developing and emerging countries and should thus be driving forces in localised climate change adaptation. However, despite the fact that local businesses and communities are in urgent need of suitable financing instruments, SMEs on the ground face significant financing challenges in many developing and emerging economies, particularly with regards to climate change adaptation.