SMEs face recurring barriers to carbon reduction

A survey from the SME Climate Hub has found that the most common barrier to SME climate action is a lack of resources, followed by a lack of funding.

SMEs are often classified as businesses with fewer than 500 employees. Though any single SME’s climate impact may seem small at first glance, the combined effect of the category is sizable, with SMEs making up 90 per cent of business worldwide.

For SMEs, the benefits of taking climate action extend beyond lessening their climate impact – or that of their biggest customers. Small businesses which choose to invest in reducing their emissions can see numerous short and long term business advantages, including: improved efficiency and reduced operating costs; complying with carbon legislation; and lower business risk.

The SME Climate Hub – a UN-backed initiative engaging small and medium-sized businesses in the Race to Zero – conducted a survey to explore what barriers are preventing SMEs from reducing their emissions. It found that businesses are committed to taking climate action, rating emissions reduction a high priority, or on average an eight out of 10.

In the near-term, SMEs are making efforts to cut their greenhouse gas emissions through reductions to energy consumption and waste (82 per cent), employee education (64 per cent), and upgrades to facilities and equipment (52 per cent). However, only 60 per cent of the SMEs in this category have a long-term emissions reduction plan in place.

The survey shows that 68 per cent go SMEs say that lack of resources, be it personnel, knowledge or time to dedicate to the issue, as the biggest barrier to SME climate action. The second-most common reason cited was a lack of funding, which 48 per cent of businesses reported.

Funding is vital to facilitate climate action, with 69 per cent of SMEs saying they need access to external funds to reduce their emissions faster or at all. In contrast, only 34 per cent of SMEs report being offered a financial incentive to reduce emissions, while 60 per cent of surveyed SMEs said they needed help securing this funding.