As the world reflects on progress on climate action since the Paris Agreement signing, it is clear that action by small and medium-sized companies is an essential part of accelerating the transition to a net-zero emissions global economy. 

Majda Dabaghi, Director – Green Inclusive Growth, International Chamber of Commerce, told TFG: “If the current pandemic has taught us anything, it is that building resilience is vital for businesses to survive and thrive into the future. The SME Climate Hub gives small and medium-sized businesses the tools to help build resilience and future-proof their business.”

The SME Climate Hub is co-hosted by the International Chamber of Commerce (ICC), the Exponential Roadmap Initiative, the We Mean Business coalition and the United Nations Race to Zero campaign. The SME Climate Hub is made possible by the We Mean Business coalition’s partnership with Amazon. It aims to mobilise and support millions of SMEs to build business resilience by providing a one-stop shop for SMEs to make an internationally recognised climate commitment, access tools and resources and benefit from incentives designed to make it easier than ever for small and medium-sized businesses to cut carbon emissions, bring innovative green solutions to market and build business resilience.

Developed in collaboration with Oxford University’s Net Zero Climate Research and Engagement Team, the new practical tools and resources launched today on the SME Climate Hub will support small and medium-sized businesses to curb emissions and build business resilience. SMEs will now be able to take advantage of accessible tools and resources to help them achieve the SME Climate Commitment — halving emissions before 2030, achieving net zero emissions before 2050 and tracking progress annually. These tools and resources will allow SMEs to measure and manage emissions, increase resource efficiency and lower overheads, track and communicate progress and access climate action resources and services.

SMEs from 31 countries in all continents, including Mexico, Brazil, Colombia, USA, Canada, Philippines, India, Australia, France, Sweden, UK, South Africa, Uganda, Ghana and Mauritius, have already made the SME Climate Commitment and can now access practical tools and resources on the SME Climate Hub to help them start to take concrete action to future-proof their businesses.

Several major multinational corporations, including Ericsson, IKEA, Telia, BT Group, Unilever and Nestlé, that have set targets to halve emissions before 2030 and reach net-zero emissions in their value chains, have also committed to support the SME Climate Hub through a “1.5°C Supply Chain Leaders” group. These companies have made a firm commitment to include climate-related targets and performance in their supplier purchasing criteria — and to work with the SMEs in their supply chain to halve emissions before 2030 and deliver net-zero greenhouse emissions before 2050. They will also provide concrete tools, share knowledge and exchange best practices for implementing robust climate strategies through the SME Climate Hub.

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Ahead of the next round of climate negotiations (COP26) in Glasgow in November 2021, small and medium-sized businesses from around the world are being encouraged to make the SME Climate Commitment to both show leadership on climate action and benefit directly from a more sustainable business strategy.

“The SME Climate hub is enabling resource stretched SMEs to access the practical tools and information they need to remain in touch with the demands of their clients, communities and governments. The repository will help level the playing field for these vital businesses that want to take action but often struggle to know where to begin on the road to a sustainable future,” said John W.H. Denton AO, Secretary General, International Chamber of Commerce (ICC).

“All companies of all sizes should take action to halve the value chain emissions before 2030 – to be aligned with the latest science. To support rapid action, better tools and resources are required.  We are therefore happy to take the first step in launching an open platform for sharing of tools and resources for SMEs,” said Johan Falk, Co-Founder and Head of Exponential Roadmap Initiative.

“To mitigate against the worst impacts of climate change, it is critical that we halve emissions by 2030. That means that SMEs need to make a commitment to tackle climate change and take action on that commitment as quickly as possible. The practical tools and resources aggregated by the SME Climate Hub will provide SMEs with the fastest and smartest routes to act on climate. It  makes them attractive suppliers to the hundreds of multinationals that need SMEs emission reductions as part of their bold climate action plans,” said María Mendiluce, CEO, We Mean Business coalition.

“Solutions only matter to the planet if they are implemented so the team at Oxford Net Zero is so thrilled to be working alongside the SME Climate Hub to build a toolkit that can be used by small and medium-sized businesses around the world. As an independent academic institution our mission is to inform leaders with the best available science-based resources for taking climate action and this project is just one of many we hope to offer the public as part of this mission,”said Kaya Axelsson, Net Zero Policy Engagement Fellow, University of Oxford.

“The SME Climate Hub will support companies to expand their climate commitments across their entire value chain, enabling SMEs – which represent over 90% of the world’s businesses – to Race to Zero. This will be an exciting turning point, and we look forward to seeing exponential growth in corporate net zero commitments as we work towards COP26,” said Nigel Topping, UK High Level Climate Action Champion for COP26.

“As a small business owner, I have seen first hand the benefits of putting a sustainable future at the heart of my business strategy, but I also know that even when we desperately want to do well, as a small business, it is not always easy to know where to start. That is why I am so excited about the SME Climate Hub – it allows small business owners like myself to make a climate commitment with the confidence that they will be supported with practical resources and incentives,” said Gonzalo Munoz, CEO TriCiclos, Chilean High Level Climate Action Champion for COP25.

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Support is vital for SMEs

It’s not news that business has a huge role to play in ensuring we halve greenhouse gas emissions by 2030. Or that this 2030 milestone is critical to avoid runaway climate change. But until now, the focus has been very much on big business. Multinationals like IKEA, Unilever and BT Group were among the businesses that gave governments confidence the ambition of the Paris Agreement was possible. Now around 1,000 companies have committed to cut their emissions in line with science. And we are seeing new announcements each week, recently from the likes of corporate giants Facebook, Uber, Google and Amazon.

For these companies, one of the most challenging parts of achieving their science-based emission reduction targets is addressing the emissions from their supply chains. An average of 5.5 times a company’s direct emissions is located in a company’s supply chains which often encompass thousands of smaller firms operating in a broad cross-section of countries. It is therefore vital that all those small and medium-sized companies in large corporate supply chains decarbonise, and that they are supported and incentivised to do so. Smaller companies do not have the luxury of sustainability teams to take them on this journey, so ensuring they get the support they need is vital.

SMEs’ critical role in scaling sustainable economy

An incredible 90 per cent of business worldwide is carried out by small and medium sized enterprises (SMEs) and these businesses employ over two billion people. SMEs are truly the backbone of our global economy and yet have been largely left out of climate action initiatives to date – leaving them deprived of the tools needed to ensure resilience in the face of growing climate risk.

If we are to halve greenhouse gas emissions by 2030 worldwide we need strong climate leadership from companies for a finance and technology shift towards green solutions with exponential potential. We can build a stronger, more resilient and future-proof global economy and increase human prosperity and health – within the planetary boundaries. The SMEs, as they are the backbone of global economy, will be absolutely critical in developing and scaling the new, green solutions in renewable energy, transport, circular solutions, required to shift-out the old fossil-based solutions.

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SME Climate Hub

The newly-launched SME Climate Hub has been created to tackle this lacuna in global climate efforts head on. Simply put, we can only drive emissions reductions at the scale needed to meet the Paris Agreement if climate action becomes everyone’s business – and that means starting with the SMEs at the heart of every community, in every country the world over.

The pure economic rationale for launching the SME Climate Hub in the wake of the Covid-19 crisis could not be clearer. Disruptions to the supply of essential goods over recent months have clearly shown the imperative to build bottom-up resilience to external shocks in global supply chains. SMEs that have proven so vulnerable to the demand shock and workplace disruptions caused by the pandemic, are in the main no better equipped to deal with climate-related disruptions to business continuity. We also need to be fully mindful of the severe constraints that many SMEs are now operating under as a result of the economic hardship wrought by Covid-19. To some this may provide a convenient pretext for delaying necessary climate action. But that, to our minds, would be to miss the opportunity to embed climate action as a tool for SMEs to recover stronger from the turmoil of recent months and to create long lasting business opportunities.

To this end, the SME Climate Hub will create an ecosystem to enable SMEs to leverage climate action as a powerful means of increasing their competitive advantage. It will demonstrate how taking action on climate can help companies win and retain business – especially from those large companies that are trying to decarbonise. It also shows how climate action can reduce costs by increasing areas like energy efficiency and enhancing access to capital since investors have a growing concern about their portfolios’ recognition of climate related risk.

The International Chamber of Commerce (ICC), the Exponential Roadmap Initiative and the We Mean Business coalition and teams alongside the United Nations Race to Zero campaign have developed the platform.

We urge all small and medium-sized companies to commit to halving greenhouse gas emissions before 2030 and reaching net-zero emissions before 2050 through the SME Climate Hub. As well as experiencing the multiple business benefits of taking climate action, SMEs making this commitment will be globally recognised by the United Nations Race to Zero campaign. Our aim over time is to have millions of SMEs signed up to take climate action, so every commitment counts.

The SME Climate Hub will provide accessible tools and tailored resources to help them reduce emissions and build business resilience, as well as help to get green solutions to market – alongside opportunities for businesses to unlock direct commercial incentives.

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1.5°C Supply Chain Leaders

And importantly, several major multinational corporations – including Ericsson, IKEA, Telia, BT Group and Unilever – that have set targets to reach net-zero emissions in their value chains have committed to support the SME Climate Hub through a new ‘1.5°C Supply Chain Leaders’ group. These companies have made a firm commitment to include climate-related targets and performance in their supplier purchasing criteria. They have also pledged to work with the SMEs in their supply chain to deliver net-zero greenhouse emissions before 2050. Given their own experience with cutting emissions, they will also be providing concrete tools, sharing knowledge and exchanging best practices for implementing robust climate strategies through the SME Climate Hub.

Not only are large companies starting to require suppliers to align with their climate goals, investors are increasingly looking at how their clients’ operations and products are impacting climate change.

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Significantly, in recognition that climate change threatens financial stability 72 central banks and supervisor networks have joined forces to anticipate and manage climate risk and scale up green finance through the Network for Greening the Financial System (NGFS). This network, including the Bank of England and Banque de France, represent five continents and around 60% of global greenhouse gas emissions, and are responsible for the supervision of over three quarters of the global systemically important backs and two thirds of global systemically important insurers.  In addition, the Net Zero Asset Owner Alliance represents asset owners with over US$ 4.6 trillion that are committed to transition their investment portfolios to net-zero GHG emissions by 2050.

Our aim with the SME Climate Hub is to help millions of SMEs develop climate action plans – and to provide them with a clear commercial boost for doing so. Those that take part will position themselves to become the most attractive suppliers to the hundreds of multinationals with decarbonisation plans, as well as to the growing number of investors now addressing climate-related risk.

With the right support, we believe that the SME Climate Hub can play an important role in accelerating the race to a net-zero future. We invite you to join us in this practical effort to ensure that the world can recover better from Covid-19, harnessing the unique power of SMEs to help drive the transition towards a safer and more prosperous clean net-zero future.

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