Although the majority of small and medium enterprises (SMEs) believe that taking climate action is the right thing to do, many are being held back due to financial and resource challenges, according to a new study.
The SME Climate Hub’s annual study of almost 350 SMEs from 40 countries and more than 20 industries found that the majority of SMEs want to increase climate action. The survey found that despite 77% of respondents not being asked to reduce emissions by customers, 80% are doing so as they believe it is the right thing to do.
With SMEs accounting for 90% of businesses globally, 70% of the world’s workforce, and contributing more than half of global GDP, according to the International Labour Organisation, many feel empowered that collectively they can make a real difference. Indeed, 65% of respondents stated that climate action would differentiate their business from competitors, with 73% viewing climate action as a way to enhance their reputation.
Common challenges
The survey showcased common barriers that are still facing the SME community. With 70% stating they need more financial help to take action or accelerate emissions reduction plans. In total, 47% of SME respondents claimed they would need up to $100,000 (£82,000) of public and private investment to reach net zero.
58% cited a lack of skills, resources and knowledge, of respondents as barriers to taking more action, mainly due to how small SME teams are.
“Despite their collective impact on communities and economies, small businesses are often amongst the most vulnerable to change and disruption,” said Pamela Jouven the SME Climate Hub’s director. “Rising global temperatures and weather-related disasters particularly impact SMEs given their localized supply chains, centralized 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.”
As revealed by the study, more suppliers than ever are being asked to measure, report and ultimately decrease their emissions. SMEs tend to account for many of the Scope 3 emissions of larger corporations. Larger firms wishing to have targets verified in line with 1.5 °C or net zero by the Science-Based Targets Initiative (SBTi), will need to set Scope 3 goals.
However, SMEs still need better measurement and monitoring tools, according to 61% of respondents. The SME Climate Hub, which provide such tools, has seen its membership grow to more than 5,500 businesses across 112 countries since it was launched two years ago.
