Do SMEs need more help as they move to ‘net zero’ and where can they get that help? , can and should do more to help.
Entitled “Financial Innovation for SME Net Zero Transition,” the report makes a significant contribution to the climate change debate as it applies to small businesses. Specifically, four organizations assembled the study: Cambridge Institute for Sustainability Leadership (CISL), Business for Social Responsibility (BSR), We Mean Business Coalition and SME Climate Hub.
But for those with the time and patience, the survey highlights some of the challenges small businesses will face over the next decade. A problem that cannot really be ignored.
As the report notes, small businesses are part of the problem when it comes to climate change. Around the world, about 99% of companies fall into the SME category, many of which are small, but collectively have a significant impact not only on national economies, but also on the amount of carbon dioxide emitted into the atmosphere. give. In fact, within the zones covered by the OECD, SMEs account for 60% of emissions.
And as the world heads towards net zero, that creates a bit of a problem. Small businesses aren’t so lucky or blessed.
lack of skills
According to the report, two-thirds of small business leaders are concerned that they lack the skills and knowledge to adequately address the need to reduce emissions. As a result, over 60% of companies are slow to respond. Still, without concerted action from the business community from this quarter, it will be very difficult for policymakers to effectively meet their net-zero promises. The report claims help is needed.
Giulio Berruti, BSR Climate Director, said:
The obvious place to seek help could be the government, and depending on which jurisdiction you happen to operate your business in, help could be forthcoming. But the report’s authors are calling for a concerted response from the business community itself. They argue that banks and corporate buyers, who provide a lot of funding to small businesses, are particularly well suited to provide support.
So what does that actually mean? According to the report, large organizations have the resources to provide knowledge and technology to small businesses, and can also drive change through realignment of business models and behaviors.
But it begs the question. What support can small businesses really expect from banks and large customers, and what can those organizations reasonably expect to do?
In fact, the study provides many examples from within the UK and around the world.For example, it points to the ‘Carbon Tracker’ offered by British Bank’s NatWest to small business clients. Essentially, this is a knowledge solution designed to give small businesses the information they need to limit their emissions. Similarly, Lloyds Bank offers a Green Building Tool that allows businesses to assess the energy efficiency of their facilities.
Banks can also use their own lending policies to drive change. Banco Votorantim in Brazil offers better financing terms to clients who maintain high social and environmental standards. Using a proprietary procedure, Banco Votorantim scores borrowers based on their environment and work performance. Corporate customers can also play a role. The report quotes Sustain and Save from supermarket Asda. It is a tool designed to help businesses drive efficiency when interacting with small business suppliers.
net zero ecosystem
But why should wealthy companies spend time, money and administrative bandwidth on initiatives focused on small businesses? Doing so simply reflects their own responsibility on the road to net zero. It can also be argued that “Most large businesses rely on thousands of small business suppliers, and banks often serve a large number of small business customers. It plays an important role in encouraging corporate behavior to net zero,” said Giulio Berruti.
Grant Rudgley, CISL’s Banking Environment Initiative Lead, agrees, believing that banks have a specific role to play. “SMEs are the backbone of the global economy. Supporting their journey to net zero is a key priority for their banks, requiring new financial products and advisory solutions,” he said. I was.
But are there demands for all this on the small business side? The report thinks so. Those who took part in the survey were critical of the net zero resources available and called on banks and customers to provide more useful information and services.
I have to say that the report offers some indication of an ideal world scenario in which companies of all sizes work together to meet climate goals. In the real world, where small businesses are struggling to cope with the economic challenges caused by inflation and a slowing global economy, climate concerns may be pushed aside for the time being. But maybe that’s the point. All companies will have to comply with net zero regulations at some point. Large organizations have the resources to prepare. By sharing these resources, you can bring your own customers and suppliers towards reducing emissions. That’s the theory. Whether it will become widely practiced remains to be seen.