2026, Vol. 9, Issue 1

author(s)
Henrietta Ighomrore

abstract
Carbon credit markets are increasingly positioned as central instruments in global climate mitigation strategies, designed to mobilize private capital toward emissions reduction while supporting sustainable economic development. At a broad level, these markets have expanded rapidly, yet participation remains concentrated among large firms and specialized project developers. Small businesses despite their collective emissions footprint, innovation capacity, and local economic importance are often excluded due to high transaction costs, technical complexity, and regulatory barriers. This exclusion limits both the scalability of carbon markets and their potential contribution to inclusive green growth. This paper analyzes policy pathways that enable small business integration into carbon credit systems by aligning climate objectives with enterprise development and economic returns. It examines how existing carbon market architectures inadvertently disadvantage small firms through stringent monitoring requirements, high verification costs, and limited access to finance. Drawing on environmental economics, SME finance, and climate policy frameworks, the study identifies structural reforms that reduce entry barriers while preserving environmental integrity. The analysis then narrows to policy instruments that directly support small business participation, including aggregation platforms, standardized methodologies for low-scale projects, digital measurement and reporting tools, and targeted public risk-sharing mechanisms. Particular attention is given to how these policies influence expected economic returns for small businesses, transforming carbon credits from compliance-driven instruments into viable revenue streams that support reinvestment, productivity gains, and long-term sustainability. By linking carbon finance with SME growth strategies, the paper demonstrates how inclusive carbon markets can enhance market depth, improve emissions outcomes, and stimulate local economic resilience. The study concludes that integrating small businesses into carbon credit systems is not merely an equity consideration, but a strategic requirement for scaling climate finance and achieving durable, economy-wide decarbonization.