Six in ten SMEs feel lack of support for net-zero plans
Majority of SMEs see knowledge gap as key issue in net zero, plus a lack of funds and a need for tools for measuring and monitoring emissions.
Six in ten small and medium-sized enterprises (SMEs) have identified a lack of outside support in achieving net zero, citing challenges related to lack of resources and internal expertise.
The results come from a survey by the SME Climate Hub, which took in viewpoints from 344 business leaders across 40 countries. Two-thirds of respondents had fewer than 25 employees, and 12% had more than 100 employees but fewer than the maximum 500.
In the results from the survey, 58% of respondents claimed that a lack of skills and knowledge was holding back their net-zero activity, while 61% claimed that tools for measuring and monitoring emissions were needed for SMEs to take greater climate action.
On strategies to address SME shortcomings when it comes to net-zero planning, Olamide Olaofe, a director for working capital solution development at Lloyds Bank, said: “When we come in as a bank to work with an SME, an ambition is to help reduce carbon emissions by more than 50% by 2030.
“We’ve set sector specific targets. For example, we’ve tried to provide financing for SMEs in the space of renewable energy such as solar panels, to help make that transition a lot smoother. From a UK perspective, we're trying to offer asset finance business for electric vehicles, as these vans or cars can demonstrate that SMEs are moving towards net zero.”
The data was published in conjunction with a report by the Cambridge Institute for Sustainability Leadership, Business for Social Responsibility (BSR), the We Mean Business Coalition, and the SME Climate Hub. The report looked to highlight the role of commercial banks and multinational corporations in helping SMEs reach net zero.
According to Olaofe, something frequently cited by SMEs is a lack of understanding about how the journey to net zero applies to the sector. This lack of a clear plan stands in contrast to the finance or automotive sectors, which have routes to net zero through organisations such as the Glasgow Financial Alliance for Net Zero (GFANZ) or, in the case of the UK, a government ban on the sale of new petrol or diesel cars from 2030.
ESG solutions for SMEs
According to BSR, SMEs account for 99% of businesses globally and, in the OECD region, are responsible for more than half of industrial emissions.
A proposed reporting solution given in the joint report was a shared ESG and emissions data repository between SMEs, corporates and banks that can provide better information on areas such as Scope 3 (supply chain) emissions. This repository could then potentially be used to incentivise SME reporting and transition more effectively.
The report showed 32% of SME respondents had already seen their emissions go down. According to Claire McCarthy, net-zero manager at the We Mean Business Coalition, this fall has largely come from reductions in the form of reducing waste and energy consumption.
Speaking to Net Zero Investor, Kai Hunter of Conister Finance argued that, while SMEs faced an unclear future, they remain more committed to net zero than ever.