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2011 Vol.1
Environmental Business of Small and Medium-Sized Companies


Small and medium-sized companies, mainly in manufacturing, continue to perform poorly in the face of the worldwide recession after the “Lehman shock”. With an aging population and a decreasing number of children, the business environment for small and mediumsized companies is expected to become even more unfavorable. At the same time, the market for environmental business continues to expand. The size of the market in Japan was 45 trillion yen in 2006, and the market size worldwide was said to have reached approximately 600 trillion yen in 2007 through 2008.
Expansion of the market for environmental business has been driven by the rising demand for pollution control in fast-growing developing countries like China and India, increased investment in countermeasures against climate change, and investment policies, including the United States’ Green New Deal, as measures to boost the economy.
In Japan, environmental technologies have been improved to overcome environmental challenges, as seen in pollution control measures adopted during the period of rapid economic growth and energy-saving technologies developed in response to the oil shock of the 1970s. By 2000, Japan had become the world’s largest exporter of environment-related equipment. However, the position has since been taken over by China and Korea, which are providing cheap products one after another to the international market, and Japan’s market share shows a declining trend.
As an environmental protection measure, the Ministry of Economy, Trade and Industry, the Ministry of the Environment and the Tokyo Metropolitan Government have introduced a system for trading the amount of carbon dioxide reduction/absorption as emission credits. Small and medium-sized companies can receive equipment subsidies by implementing afforestation projects or projects for energy conservation and can also “sell” the amount of carbon dioxide reduced/absorbed to other companies. Armed with their own technologies, some small and medium-sized companies strategically position themselves to enter the international market without relying on subsidies from the central government.
This paper summarizes the domestic and international trends in the growing environmental markets and various subsidy programs for domestic small and medium-sized companies, and introduces examples of their environmental business.