There is a saying within the climate community that says ‘what gets measured gets managed’. It is a perfect way of summing up the challenge of cutting greenhouse gas emissions to zero. How can the journey start without knowing the distance to the destination?
The SME Climate Hub exists to help businesses effectively measure, report on – and manage – their emissions.
Started in 2020, the idea was simple: support small and medium enterprises (SMEs) in taking climate action to keep global temperature rise below 1.5°C. The initiative forms part of the United Nations’ Race to Zero campaign, which was designed to support emissions reduction from a wide range of players, from cities to financial institutions.
The SME Climate Hub is the official pathway for small and medium sized enterprises to join the initiative.
Small business, big impact
The term SME can be deceptive and doesn’t necessarily mean a local corner store. By the SME Climate Hub’s standards, the category includes any business with up to 500 employees.
Taken together, SMEs make up 90% of all businesses globally and so cutting emissions within this group is vital.
Any business which joins the SME Climate Hub pledges to take action to halve their emissions by 2030 and achieve net zero by 2050. All companies have to report publicly on their annual progress towards cutting their emissions and reaching net zero targets.
Joining the SME Climate Hub is a serious commitment that will be transformative for any business whatever the size. Fortunately, the initiative supports businesses with a wealth of resources, including guidance on setting a 1.5°C-aligned business strategy, a carbon calculator offering a personalized emissions breakdown, and courses on taking effective climate action.
Pressure building
Pamela Jouven, Director of the SME Climate Hub, explained in a recent article that “the pressure on businesses to track and reduce their emissions is escalating,” with new regulations already coming into force in the UK and the United States.
“Businesses are also faced with customer, investor, and employee demands to account for and report their carbon emissions,” she added. Emissions reporting and reduction, therefore, becomes essential not only to stay in line with new legislation but to protect against business risks and remain competitive.
Businesses often operate without a complete understanding of their environmental impact. Reporting is one way to raise awareness of these impacts and ensure decision makers take action. This can be a challenging process as emissions have to be counted across the entire supply chain, and hunting them down can be a full-time job.
To help companies navigate their way through the maze towards net zero, the initiative recently launched a new reporting tool to compliment its existing suite of action and measurement tools. The resource allows SMEs to provide a streamlined report on where their emissions are coming from and what actions they have taken over the past year to reduce them.
All data will be made publicly available to drive further transparency and to support other businesses to learn which climate solutions might work for them. Companies can also put the reports to wider use, for example, to show investors or customers what actions they are already taking on their net zero journey.
Virtuous circle
One category of SME customer interested in their reporting will come in the shape of a large corporate partner. Many corporates have made net zero pledges and understand the need to work with SMEs – as their suppliers – in order to reduce their indirect, or ‘Scope 3’, emissions.
SMEs which can evidence their efforts to cut emissions through the new reporting tool will, therefore, be contributing to a virtuous circle: addressing their own climate impact and supporting bigger partners to reduce their emissions, too. And as new regulations come into force, the push to report will become stronger as SME corporate partners have greater pressure put upon them to measure their Scope 3 emissions.
Johan Falk, CEO of Exponential Roadmap Initiative, the co-founding partner of the SME Climate Hub together with the We Mean Business Coalition, foresees that banks will “start to link green loans to SME Climate Hub reporting capability” and will ask their SME customers to disclose progress via the Hub.
“We developed the SME reporting tool with simplicity in mind, while ensuring alignment with science. SMEs can start reporting on concrete actions without being required to provide perfect numbers from day one, but rather show progress and develop capabilities over time,” he added.
Starting the journey
As more companies make net zero pledges, it is essential to have accountability mechanisms which track and monitor progress. The SME Climate Hub’s reporting tool is a new contribution to a growing field which pushes companies to do their homework.
But it is important to note these actions are only one part of a comprehensive climate journey, what the We Mean Business Coalition calls the “Four A’s” of climate leadership. To have real climate impact, accountability needs to sit alongside strong ambition, action, and advocacy, driving down business emissions, while inspiring systems of change across industry, governments and customers.
Taking effective climate action can be daunting for small companies that want to do good but don’t know where to start.
The urgency of the crisis and pressure from corporate partners means more suppliers need to engage with the issue, and fast. The SME Climate Hub is able to set them on the right path and its new reporting tool is a key step on the journey.
This post was sponsored by the We Mean Business Coalition. See our editorial guidelines for what this means.
Adam Wentworth is a freelance writer based in Brighton, UK.