Navigating climate change: Climate change awareness and strategies in micro, small, and medium-sized enterprises in a developing economy

PLOS One | https://doi.org/10.1371/journal.pone.0327165 July 2, 2025 19 / 26 in production and operational processes may influence how these organizations create value. Across economic sectors, most ventures showed greater awareness of strategies at the corporate practice level than at the operational process level. Our analysis also revealed substantial heterogeneity in strategic timing for achieving carbon neutrality, though we observed notable homogeneity in timing within the primary and secondary sectors. Investor pressures, awareness of car- bon markets, and participation in carbon programs were linked to a greater likelihood of firms perceiving carbon neutrality as achievable within five years. Conversely, MSMEs with gender-balanced governance, capital constraints, and external pressures from customers and investors—along with engagement in carbon-related initiatives—were less likely to dismiss carbon neutrality or exclude it from their strategic planning. In addition, our findings highlight significant variation in carbon neutrality strategies among MSMEs, pointing to a lack of clear guidelines on how to effectively implement such strategies. Based on these insights, we now present the theoretical implications, and public policy and practical recommendations derived from this project. Theoretical implications Our study contributes to the ABV approach by illustrating how MSMEs’ responses to climate CC are shaped by their contextual environment, particularly ecological pressures and normative discourses. ABV posits that firms allocate their

attention to issues they perceive as most pressing, which, in the case of MSMEs, is influenced by sectoral character- istics, resource availability, and the salience of sustainability-related pressures. Our study reveals that while MSMEs generally recognize broad climate-related concepts, their understanding of more technical terms like carbon neutrality and decarbonization is limited. This suggests that MSMEs’ strategic attention is unevenly distributed across the business community, with some firms prioritizing CC adaptation while others focus on short-term financial concerns. The observed Table 8. Comparison of Results with Prior Empirical Research. Extant Literature Key insights As suggested by [32], scientific knowledge often diverges from public understanding, highlighting the need for targeted educational programs specifically designed for the MSME population. MSMEs only possess a basic understanding of CC, while more special- ized or advanced aspects of the topic remain largely unfamiliar to them (i.e., in line with previous literature). As noted by [33], firms with limited human and financial resources tend to be more vulnerable to climate risks, which leads them to perceive a greater internal impact. Ventures perceive climate risk in diverse ways, influenced by internal characteristics such as firm size and stage of development (i.e., supports previous literature). As previous research suggests [26], organizational objectives may often be misaligned with climate-related outcomes due to existing knowledge gaps concerning their environmental impacts.

Ventures across economic sectors exhibit varying levels of strategic climate change (CC) awareness, with firms in the primary sector demon- strating a higher awareness of corporate sustainability strategies (i.e., as stated in previous research). Previous studies (e.g., [37]; [35]) suggest that external pressures often serve as catalysts for the adoption of proactive sustainability strategies. Ventures tend to adopt more proactive carbon neutrality strategies when they perceive strong external pressures, such as those exerted by inves- tors (i.e., as shown in previous studies). Empirical evidence [25] suggests that customer pressure serves as a driver of proactive environmental practices. Our results indicate a positive, albeit statistically non-significant, effect of customer pressure on firms’ short-term strategic timing for achieving car- bon neutrality. This outcome may be explained by the influence of other stakeholders, such as investors, who may play a more prominent role in shaping strategic environmental decisions within this contextual setting (i.e., in contrast to previous literature). Evidence suggests [34] that internal environmental policies and practices are related to environmental performance Our regression analysis provides mixed positive evidence on the influence of internal carbon-related practices and programs in shaping short-term strategic timing for achieving carbon neutrality (i.e., to an extent, similar to previous research). https://doi.org/10.1371/journal.pone.0327165.t008