Lack of policies or government-sponsored benefits and insufficient funding are the two leading barriers preventing small and medium enterprises (SMEs) from taking climate action, said the SME Climate Hub 2024 survey on Wednesday by We Mean Business — a global nonprofit coalition that works with the world’s most influential businesses to act on climate change.
According to the 288 SMEs across 44 countries and 25 industries part of the survey, 52 per cent cited lack of policies or government-sponsored benefits as the top challenge to action on climate change and insufficient funding. 52 per cent of respondents also highlighted lack of funding as another top reason while 39 per cent said lack of data around current emissions is a challenge. Lack of time and skills and insufficient return on investment were barriers for SMEs to work towards reducing emissions.
Underscoring the role of SMEs in addressing climate change, María Mendiluce, CEO, We Mean Business Coalition and Co-founder, SME Climate Hub, said, “In order to transition to a clean and just economy, we cannot leave behind small businesses and the communities they serve. Small businesses are the nimble changemakers we need to push climate action forward, but we need an all-of-society approach that enables this action.”
Mendiluce said support mechanisms from governments and incentivizing programs from partners such as financial institutions and corporate supply chain leaders are essential to enable small businesses to take more comprehensive action.
SMEs have been unable to act on climate change despite several benefits. According to those who have taken action to reduce emissions, 62 per cent said it has enhanced their business reputation while for 52 per cent, it has increased business differentiation for them from the competition. Branding benefits, meeting customer expectations and attracting new customers have been some of the other key benefits.
“With a more concentrated customer base, staff and localized supply chains, along with more precarious balance sheets, SMEs are often more vulnerable to the impacts of severe weather events caused by climate change. In turn, their prioritization of emissions reductions is only increasing,” the survey added.
As a result, reducing emissions grew in priority for 44 per cent of SMEs compared to last year, and maintained the same level of priority for 53 per cent of SMEs. Only 3 per cent of SMEs reported deprioritizing emissions reductions.
Importantly, to encourage MSMEs to address the challenge related to climate change and its impact on environment, the government of India currently operate the ZED scheme.
Launched in October 2016 and revamped in April 2022, the ZED scheme offers certification for environmentally conscious manufacturing under three certification levels (gold, silver and bronze) classified according to 20 performance-based parameters such as quality management, timely delivery, process control, waste management, etc.