Climate action by SMEs
SMEs and SBTs
Over a thirty-year timespan, global greenhouse gas emissions need to halve by 2030 to reach net zero by 2050, followed by a net removal of greenhouse gases already emitted into the atmosphere. Doing this requires the fastest economic and societal transition in history – one in which businesses have a critical role to play.
Knowing that small and medium-sized businesses represent over 90% of all Belgian companies, their combined efforts have great potential to reduce emissions and help provide an answer to the climate urgency. Moreover, by cutting their emissions and creating innovative climate solutions, SMEs can offer tangible business value and gain competitive advantage.
In doing so, they inspire wider action in society. Unfortunately, many SMEs remain hesitant when it comes to assessing their carbon footprint and determining the best way forward. Nevertheless, building climate resilience is critical for SMEs to remain viable but they often lack resources, know-how and incentives.
Within BACA, we see this trend reflected in an underrepresentation of SMEs in our community. Despite being the lifeblood of the Belgian economy, only one out of three BACA members is a small or medium-sized enterprise.
(For the purposes of target validation by SBTi, an SME is defined as a non-subsidiary, independent company with fewer than 500 employees (head count). In Belgium, an organization with up to 250 employees is considered an SME.)
With the aim of shining a light on the challenges SMEs encounter while defining and acting upon their climate ambitions, we organized a dedicated SME roundtable session on November 19 of last year (2021). Invitees were Belgian SMEs with significant climate ambitions and the shared aim of aligning their operations with the latest climate science, using Science Based Targets (SBTs).
Table of challenges and solutions
With around twenty Belgian SMEs around the table, an interactive brainstorming session allowed to assess the main hurdles experienced on their SBT setting trajectories. What resulted was an interesting mix of challenges and ideas about the why and how
of tackling the various stages of climate action.
- Committing: How to gather the necessary information to assess your company’s situation in a structured way and how to use it to get your team and board of directors on board?
- Measuring: How to choose the carbon footprinting tool that best fits your organization and how to use it to set targets and plans for achieving them?
- Reducing: How to keep the balance between short- and long-term actions and how to integrate their cost into our company’s business plan? How to involve our company’s stakeholders in our efforts?
- Disclosing: How to communicate about our climate actions in a correct, yet compelling way? How to standardize the reporting of our progress?
This table assembles the most popular challenges and ideas for solutions as they were discussed during the session. For each challenge, it suggests during which future BACA event the topic will be addressed and (at least part of the) answers will be provided.
Eagerness to cover the value chain
A quick peek at the impact-feasibility graph on which the most popular ideas were combined, reveals a remarkable interest of participating SMEs to go beyond the ‘expected’ emission reduction requirements. More specifically, the current SBT setting trajectory as set out by the Science Based Targets initiative requires that SMEs set targets for Scope 1 and Scope 2 emissions, basically covering their own emissions and electricity supply. Unlike larger companies, SBTi does not expect SMEs to set targets for emissions originating in their value chains but does encourage them to actively map and reduce these Scope 3 emissions.
The underlying rationale for this simplified approach corresponds with the aforementioned challenges SMEs experience, mainly the lack of resources and capabilities needed to set scope 3 targets and monitor progress against them. However, SMEs are strongly encouraged to commit to measuring and reducing the emissions in their value chains and the round table session proves that ambition to do so is not a limiting factor – quite the contrary.
The following ideas for including scope 3 emissions in the SMEs climate efforts crossed the table:
- implementing a procurement policy that has climate impact as a criterium
- working with SBTi, expert groups, sector federations and/or public consultations to define sector specific Scope 3 guidance
- providing open-source Scope 3 calculation tools for SMEs
- making Scope 3 an obligatory element in climate action schemes for SMEs
- creating a third party approved list of scope 3 “must haves”
Even though limited financial, technical and/or human resources might sometimes prevent climate efforts by SMEs to reach their full potential, we experience firsthand that climate ambitions and creativity are no limiting factor in order to get the climate train moving.
With BACA, we are convinced that we have a role to play in helping SMEs to reach their full climate potential. We engage to do so by providing a relevant program of events and webinars, with opportunities to learn, exchange and network. We are currently assembling the most relevant tools and resources that can support SMEs on their climate journeys. They will be made available in the resource section of our website in the beginning of March 2022. Keep an eye out for them!
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