Adoption of eco-innovation for SMEs in Pakistan

The pilot project in Pakistan introduces an eco-innovation approach into the national textile sector, with a strong focus on small and medium-sized enterprises (SMEs). The initiative helps SMEs embed sustainability and social compliance into their core operations by applying life cycle thinking and circular economy principles. The textile sector is central to Pakistan’s economy but also creates significant environmental and social pressures due to its high consumption of water, energy, and chemicals. While programmes such as ILO-Better Work Pakistan have advanced labour standards and social compliance, a major gap remains in environmental innovation. This project directly addresses that gap by applying an eco-innovation methodology that aligns UNEP’s environmental priorities with the ILO’s work on decent employment and a just transition. It also tackles the key barriers SMEs face—limited technical expertise and financial constraints—through a tailored eco-innovation supplement designed specifically for the sector. Better Work Pakistan is selected as the implementing partner because of its strong institutional presence and existing engagement with 119 textile factories. This network provides an effective foundation to reach SMEs, build on trusted relationships with factory management, and ensure that gender equality and worker welfare are integrated into environmental improvements. By combining UNEP’s technical expertise with the ILO’s national footprint, the project aims to deliver measurable environmental, social, and economic gains. The project is implemented through four interconnected activities. Activity 1 focuses on SME engagement and coaching. SMEs are identified and profiled through readiness assessments, followed by consultation sessions introducing eco-innovation principles. Participation is formalised through written commitments. Activity 2 involves detailed eco-innovation assessments. Baseline evaluations measure current environmental performance, particularly chemicals and resource use. Each SME receives a prioritised list of eco-innovation options and a tailored service report that incorporates social and gender considerations. Activity 3 supports the development of bankable proposals. Two SMEs demonstrating strong potential, commitment, and impact have their opportunity analyses refined into actionable business and investment cases to attract financing. Activity 4 focuses on knowledge sharing and case studies to ensure the pilot’s long-term value. Knowledge exchange remains a cross-cutting theme to promote sector-wide learning and replication.

Project symbol

PAK/25/07/UNP

Admin unit

CO-Islamabad

Start date

09/12/2025

End date

31/12/2026

Total allocation

50000

Total expenditure

Status

Active

0

Development Partners

United Nations Environment Programme

Country/Countries

Pakistan

Outcomes

Outcome 4: Sustainable enterprises for inclusive growth and decent work