According to a recent survey by the SME Climate Hub, small and medium-sized enterprises (SMEs) are increasingly interested in taking action on climate change, but they continue to face financial barriers to doing so.

The We Mean Business Coalition, the Exponential Roadmap Initiative, and the UN Race to Zero campaigns are behind the creation of the SME Climate Hub. The Hub offers resources and tools to help SMEs take climate responsibilities seriously and enable them to take action.

Almost 350 SMEs participated in the study, from 40 countries and more than 20 different industries. Of this group, the vast majority wanted to ‘make and act upon climate commitments.’

The survey found that 88% of SMEs now consider climate change to be a priority issue, up from 73% in 2020. Even though 77% of SME respondents had not been asked by customers to reduce emissions, 80% are doing so because they believe it is the right thing to do.

In terms of practical action, 51% are planning to invest in energy-efficient equipment and 48% are intending to increase their use of renewable energy. In addition, 34% said they were planning to set a net-zero emissions target.

Good intentions, difficult reality

However, there are still significant barriers blocking SMEs from reaching their goals. 45% of respondents said that a lack of available finance was a major obstacle to implementing climate-related measures. Nearly half of the participants said they would need up to $100,000 to achieve net zero.

Other barriers, as cited by 58% of respondents, included lack of skills, resources, and knowledge. Part of this was reported as due to organisation size, but it still emphasises the need for expert industry knowledge.

The SME Climate Hub’s director Pamela Jouven said: “Despite their collective impact on communities and economies, small businesses are often amongst the most vulnerable to change and disruption. Rising global temperatures and weather-related disasters particularly impact SMEs given their localised supply chains, centralised infrastructure, and dependence on the communities in which they operate.”

How to move forward

More suppliers are being asked to accurately measure and report their Scope 3 emissions, while also decreasing Scope 3 output. Scope 3 typically accounts for a large chunk of firms’  GHG emissions, but 61% of SMEs said that they still need access to better measurement and monitoring tools.

Since its debut two years ago, the SME Climate Hub, which attempts to provide such tools, has seen its membership increase to more than 5,500 enterprises across 112 countries. It has previously exposed other climate-related barriers such as lack of in-house expertise on environmental sustainability and a lack of finance, plus confusion on how to navigate reporting and certification schemes, which are often designed for larger businesses.

One solution, the report suggests, is the construction of a central repository for emissions data that triangulates information from SMEs, corporations, and banks. This way, SMEs can reduce the time and effort used to gather their own data, ensure that data is reliable, and guarantee that they and their partners are utilising the same emissions estimates. With the ability for many organisations to share the results of their own research, it can also make the task of refining data over time simpler.