Can SMEs mitigate climate change?

SMEs climate change

SMEs represent a significant portion of economic activity and job creation across the globe, embodying business sustainability in their operations. They are already leading the way by taking the necessary steps to address the climate crisis. These small and medium enterprises are future-proofing their businesses by reducing their emissions. 

The impact of small businesses may seem minimal, but together, these enterprises make up 90 percent of businesses globally. They impact the livelihoods of more than two billion people and drive the kind of innovation that reaches the largest corporations and biggest business leaders. 

Ultimately, they are a strong force and have an important role to play in mitigating climate change. Continue reading to learn whether SMEs can mitigate the climate crisis through the use of technology. 

Practical steps for businesses to adopt

There are numerous ways businesses can start tackling climate change. However, we need to realise that the pool of SMEs is full of small businesses including start-ups. Therefore, they may not have the same resources available to them as larger companies. In saying that, it does not mean they cannot take action leading to the mitigation of the climate crisis. 

It makes business sense to take action against climate change and create an adaptation plan. Businesses that do this will not only help the planet but improve their reputation also. This is because brands that act sustainably have a competitive edge compared to those that do not. 

The reality is we are running out of time and the time to act is now. Businesses, including SMEs, will be hard hit by the climate crisis if we do not curb temperatures. So what are some practical steps businesses can adopt to make their operations greener without experiencing massive expenses? 

There are lots of actions your business can take to become more eco-friendly that do not cost any money. By contrast, they will actually save you money and improve business efficiency. The first place to look is how much waste your business creates and how it manages waste. For example, if you are a fashion retailer, you should ask yourself, what are you doing with fabric waste? 

Many sustainable fashion brands try not to create waste. They do this by using the wasted materials to create additional items. While the fabric scraps may not be enough for another clothing piece, they can be used to make hair scrunchies or headbands. Implementing a tactic like this will see you getting more value for your money and not wasting your materials. Additionally, you need to assess how your business manages waste. 

For example, if you do not yet have a recycling bin, you should get one. Along with getting the bin so you can correctly separate waste, you should also try to reduce waste as much as possible. This could mean switching out single-use products to compostable ones, for example. 

Another action you can take is educating your employees and customers about the importance of operating in a sustainable manner. Minimising business travel will also help you reduce the ecological footprint of your business. Similarly, working with sustainable suppliers and curbing your energy consumption also help. 

The current attitude of SMEs toward climate change

SMEs have proven themselves to be key drivers of growth and innovation. This is no different when it comes to sustainability in business. One worldwide EY survey found that while 82 percent of Irish SMEs were negatively affected by COVID, the disruption also revealed opportunities for acceleration toward more sustainable business models. 

They account for around 97 percent of all enterprises globally. As a result, SMEs can pave the way for adapting to and greening climate change across various sectors. Their involvement is essential for numerous reasons. Namely, due to the climate goals we need to achieve, companies across the board must contribute. 

In addition, climate change presents risks for businesses, and SMEs have fewer resources than bigger enterprises. This means they need to be climate ready to remain resilient. They face a lot of challenges when it comes to making their operations more eco-friendly, but research finds these enterprises are very engaged and committed to pushing the sustainability agenda. 

What challenges most affect their climate action response?

As mentioned previously, there are many challenges present for SMEs when it comes to acting against climate change. The main one is they lack the resources to respond. Whether that be cash flow or manpower, these are significant barriers for SMEs when it comes to responding to climate change. Additionally, there is a lot of competition for funding to get the resources needed to scale to respond to the climate crisis. 

SMEs also find their ability to innovate is restricted due to governmental policies. Moreover, they do not know how to monitor and track their impact and struggle to find solutions that help them understand and enhance their impact. Small businesses already work incredibly hard and are doing so much to boost our economy and support our communities. 

In saying that, a lot of environmental challenges can be transformed into business opportunities for SMEs enabling them to act and respond. For example, improving resource efficiency and greening their supply chains. Ultimately, most small business leaders are concerned they do not have the adequate time, knowledge, and skills to respond to climate change. 

It is also important to mention that while SMEs have plenty of challenges and barriers, they are still doing what they can to be more responsible. For instance, reducing business travel, energy use, and the amount of waste created. Moreover, digitising their operations to use fewer resources and purchasing more recycled and reusable products.

What opportunities exist to scale and accelerate SMEs climate action?

There are lots of opportunities available to help SMEs scale and accelerate climate action. For example, the SME Climate Hub is a global initiative empowering SMEs to build resilient businesses for the future. The Hub is an initiative of the We Mean Business Coalition, the United Nations Race to Zero Campaign, and the Exponential Roadmap Initiative in collaboration with the Net Zero team at Oxford University and Normative. 

The hub offers tools, resources, and the necessary incentives to help SMEs to take climate action and pave the way to net zero. Over five thousand businesses globally have joined the hub. Committing helps them improve efficiency, gain a competitive advantage, grow their business, enhance access to capital, and manage business risk. 

Regional Collaboration Centres (RCCs) also support national climate action through technical assistance, capacity-building, and strategic networking. They were established to spur investment in sustainable development by rewarding projects that curb emissions. Since the adoption of the Paris Climate Change Agreement, they have had the broad task of implementing the nationally determined contributions under the agreement. These are just a couple of the opportunities available; there are lots of others.

Role of technology to play in amplifying SMEs climate action

Technology has a critical role to play when it comes to reducing greenhouse gas emissions and building resilience. Climate change is constantly progressing, and due to this, we urgently require innovative approaches. These approaches should combine nature and technology. 

For example, to achieve net zero by the 2050 timeline, we need to make a drastic switch. This involves changing to different technologies that do not deplete the Earth’s resources and are considerate of the planet. Therefore, these kinds of technologies need to be developed, and who better to create them than SMEs, who are the drivers of innovation?

Digital technologies are vital for achieving environmental goals. Technology and digitalisation is the main way to become more eco-friendly for SMEs. In saying that, the lack of monitoring and data systems makes it challenging for them to assess their performance, measure improvements, and set meaningful targets. 

There is a lack of reporting frameworks and solutions tailored to SME needs. Where technology is available, it is more suitable for bigger businesses and costly. If SMEs had access to these kinds of solutions, they could make a huge difference. For example, they could better track the emissions and energy consumption from their business operations.

In addition, they could appropriately reduce emissions from their use of technology and better manage their waste. SMEs could also source more sustainable suppliers and report on and measure the impact and share this with their suppliers. Challenges in accessing finance, lack of knowledge, and limited resources make it difficult for SMEs to engage properly with sustainability solutions. 

Summary

SMEs are a force to be reckoned with and have so much potential when it comes to tackling climate change. At the outset, they may appear to just be small businesses, but together, they can have a real positive impact. One-third of SMEs recognise their actions have a significant effect on climate change. 

What holds SMEs back from being able to mitigate climate change is a lack of resources and education about how to tackle climate change and become more sustainable in their business. However, even with these barriers, they are still making waves and using their enterprises as a force for good. 

Our Diploma in Business Sustainability course will help you enhance your career as a sustainability professional and overcome challenges. You will receive the practical knowledge to become a great leader as society endeavours to reach the next stage of becoming climate-resilient.

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