What existing Public-Private Partnership (PPP) models help SMEs implement carbon projects?

Public-Private Partnership (PPP) models are increasingly being adapted to support Small and Medium-sized Enterprises (SMEs) in developing carbon projects, particularly in countries like Vietnam that are establishing domestic carbon markets. Unlike traditional PPPs focused on large-scale infrastructure, these climate-focused partnerships are often programmatic, emphasizing technical assistance, capacity building, and innovative financing to help SMEs effectively participate in the green transition.

Several prominent models demonstrate how collaboration between public entities, private corporations, and financial institutions can drive SME decarbonization.

Supply chain Finance model (Results-based finance)

This model leverages the influence of large corporations to provide financial incentives to their SME suppliers.

Gucci & Intesa Sanpaolo

In Italy, a partnership between Gucci, Intesa Sanpaolo bank, and the Italian government enables SMEs in Gucci's supply chain to access preferential loans. These favorable terms are contingent on the SMEs adopting sustainable solutions, such as reducing emissions and improving energy efficiency.118

McCormick & Company, IFC, and Citi

McCormick, in collaboration with the International Finance Corporation (IFC) and Citi, implemented a green finance program for its agricultural suppliers. SMEs in the program receive interest rate reductions upon meeting predefined environmental criteria, including GHG emission reductions and waste management improvements.119

National and bilateral climate programs

These government-led models focus on building national capacity and channeling international climate finance into specific projects.

Forest Carbon Partnership Facility (FCPF)

Coordinated by the World Bank, the FCPF is a multi-layered PPP that supports countries, including Vietnam, in developing national frameworks for Reducing Emissions from Deforestation and Forest Degradation (REDD+). It facilitates coordination between governments, the private sector, and carbon funds, all while applying an internationally standardized MRV system.120

Joint Crediting Mechanism (JCM)

Initiated by the Japanese government, the JCM is a bilateral cooperation model. It provides co-financing, often with partners like the Asian Development Bank (ADB) and JICA, to support SMEs in implementing emission reduction projects in sectors like energy, transport, and forestry across many Asian countries, including Vietnam.121

Results-based Climate finance and Technical assistance

These models offer direct payments or technical support following the successful verification of emission reductions.

UNDP's Carbon Payments for Development (CP4D)

This PPP model focuses on post-verification financing. Private enterprises invest in and implement projects (e.g., waste treatment, electric vehicles), and are then partially reimbursed if the project achieves certified emission reductions through an MRV system compliant with Article 6 of the Paris Agreement.122

Climate Technology Centre & Network (CTCN)

Operating under the UNFCCC, the CTCN connects private sector technology providers with SMEs in developing countries, including Vietnam. It facilitates non-profit or co-financed technical assistance to help SMEs adopt climate-friendly technologies.123

These PPP models demonstrate a global shift toward collaborative ecosystems that not only provide financial and technological resources for SMEs but also promote the formation of transparent and efficient carbon markets, which is a crucial condition for developing countries to achieve their climate commitments sustainably.

References

118. SME Climate Hub. (2025, March 22). Success stories - SME Climate Hub. SME Climate Hub. https://smeclimatehub.org/success-stories/
119. IFC, McCormick & Company, Citi. (2021). IFC, McCormick & Company, and Citi Establish Sustainability-Linked Finance Partnership. IFC. https://www.ifc.org/vi/pressroom/2021/26544
120. Forest Carbon Partnership Facility. (n.d.). Private Sector Engagement. Forest Carbon Partnership Facility. https://www.forestcarbonpartnership.org/private-sector-engagement-0
121. Ministry of Foreign Affairs of Japan. (2025). Joint Crediting Mechanism (JCM). Ministry of Foreign Affairs of Japan. https://www.mofa.go.jp/ic/ch/page1we_000105.html
122. UNDP. (2020). Carbon payments for development (CP4D) Brochure. UNDP. https://climatepromise.undp.org/research-and-reports/carbon-payments-development-cp4d-brochure
123. Chao, J., & Toro, A. M. (2024, March 16). How to foster a more inclusive environment for SMEs in PPPs? World Bank Blogs. https://blogs.worldbank.org/en/ppps/how-foster-more-inclusive-environment-smes-ppps