Small businesses want to help tackle the climate crisis but lack finance and knowledge, new survey finds. The SME Climate Hub has launched its second annual Small Business Climate Action: Barriers and Bridges study looking at the drivers and barriers for SME climate action.
- 70% of surveyed SME leaders say they require additional funds to take action or speed up progress to reduce emissions.
- Nearly 3 in 5 say lack of climate skills and knowledge is preventing them from taking more ambitious action on climate.
- But 80% of respondents say they are taking climate action as it is the right thing to do.
Many countries and major corporations have committed to net zero, but less focus has been given to those smaller companies that make up the backbone of all economies, the SMEs. The SME Climate Hub has launched its second annual Small Business Climate Action: Barriers and Bridges study looking at the drivers and barriers for SME climate action
SMEs employ 70% of the world’s workforce and contributing over 50% of global GDP according to the International Labour Organisation. Additionally, their impact on global supply chains means any global climate targets cannot be met without mobilising SMEs on climate. Their engagement will be critical if the world is to achieve its 2030 or even 2050 targets – and yet little attention is paid to their particular needs or concerns.
Many of the leading climate and sustainability frameworks, tools and technologies are focused on meeting the needs of countries or of multinational market incumbents. Few SMEs have the same resources and capacity available as the multinationals or even national market leaders.
Yet its worth paying attention to the fact that the cycle of innovation means that many of today’s market dominant companies may not exist in 2050. Thirty years ago few of today’s leading companies, from Google, Tencent, Facebook, Tesla, even existed.
There is will, but is there a way?
The majority of SMEs have the will to create a better future for their business and for the planet and are taking an increasingly proactive approach in tackling the climate emergency. Despite 77% not being asked to reduce emissions by customers, 80% are taking climate action as it is the right thing to do according to the survey. However, substantial barriers remain.
Providing insights from SME business leaders in 40 countries and over 20 industries, the study provides a barometer for the small businesses’ climate action journey. Since SMEs make up 90% of business globally, employ 70% of the world’s workforce and contribute over 50% of global GDP according to the International Labour Organisation, they play a critical role in local communities and economies.
Pamela Jouven, Director of the SME Climate Hub, said “Despite their collective impact on communities and economies, small businesses are often amongst the most vulnerable to change and disruption. Rising global temperatures and weather-related disasters particularly impact SMEs given their localised supply chains, centralised infrastructure, and dependence on the communities in which they operate.
“At the same time, SMEs have been the least equipped to mitigate their role in the climate crisis. Small businesses are facing greater risk while also potentially missing out on the benefits of building more resilient businesses and cutting costs.”
Key findings from the survey
Finance has been identified as a major hurdle, with 70% of respondents needing funds to take action or speed up progress of their emissions reduction efforts. However, 47% of SME leaders surveyed estimated they would need up to $100,000 to achieve net-zero, which should be helped by the public and private sector investors increasing access to finance.
Another significant challenge is the lack of climate skills and knowledge, which 58% of respondents says is preventing them from taking more ambitious action on climate, likely due to SMEs having inherently smaller teams, with greater time constraints.
There is widespread acknowledgement that more accessible measurement and monitoring tools are encouraging business to take greater climate action – at least according to 3 in 5 (61%) of respondents. This trend has caused free resources such as the SME Climate Hub to increase its community to over 5,500 businesses across 112 countries in under two years.
The business benefits of climate action are becoming clearer and more widely accepted. Such benefits were highlighted as a key reason to act with 65% of respondents saying they believed this differentiated their business from competitors, whilst 73% took action to enhance the reputation of their business.
It seems clear that climate action is gaining momentum within the SME community with 3 in 5 (60%) respondents reporting having encouraged other businesses to make the SME Climate Commitment. There is undoubtedly however a long way to go.
The SME Climate Hub is an initiative of the We Mean Business Coalition, the Exponential Roadmap Initiative, and the United Nations Race to Zero campaign. The Coalition itself is a group of seven non-profit organizations: BSR, CDP, Ceres, Climate Group, Corporate Leaders Group Europe, The B Team, and the World Business Council for Sustainable Development (WBCSD).
Together the partners hope to catalyse business and policy to halve emissions by 2030. For the SME market they work in collaboration with Normative and the Net Zero team at Oxford University, to provide tools and resources to enable SMEs to make a climate commitment, take action and measure their progress towards emissions reductions in line with the latest science.
SMEs are beginning to work together
Jouven pointed out that there is a rising groundswell of climate action among small businesses globally, leading to a positive feedback loop as more SMEs encourage other businesses to act. This momentum will continue to grow exponentially.
Though any one company’s impact may seem small, together small businesses are essential in driving this change. Key to this will be access to resources and finance to help small business action. This requires collaboration between policymakers, private sector business leaders and financial institutions to create a landscape that energises SMEs through information resources, innovative policy solutions and financial incentives.