Empowering SMEs with carbon accounting tools is the key to reducing enterprise emissions across value chains

For edie at 25, Kristian Rönn, chief executive & co-founder of the enterprise carbon accounting engine Normative and Pamela Jouven, director of the SME Climate Hub, at The We Mean Business Coalition, discuss how SMEs can be equipped with the right tools to help decarbonise supply chains.

Empowering SMEs with carbon accounting tools is the key to reducing enterprise emissions across value chains

The pressure on enterprises to track and reduce their emissions is escalating. The Streamlined Energy and Carbon Reporting (SECR) regulation requires UK organisations to share carbon emissions information in their annual reports, and the United States Securities and Exchange Commission (SEC) has proposed new rules ordering companies to report on their carbon emissions and how climate change may impact their operations. What’s more, US legislation may force major federal contractors to set emission reduction targets in line with the Paris Agreement.

Empowering SMEs with carbon accounting tools – which provide an inventory of an organisation’s greenhouse gas emissions – is the key to reducing enterprise emissions, thereby ensuring compliance with tightening environmental legislation.

This is because value chains, typically involving thousands of SMEs, constitute up to 90% of corporate emissions – and SMEs often struggle to make emissions reductions. For example,  a survey by the SME Climate Hub  (2023) found that many small businesses want to help tackle the climate crisis but lack the resources and knowledge needed to make robust emissions cuts.

To address these concerns, the Business Carbon Calculator was developed by Normative, with the support of Google.org and in partnership with the UN-backed SME Climate Hub. The tool – which is free to signatories of the SME Climate Hub – helps SMEs begin calculating their carbon emissions, enabling them to identify opportunities to make carbon reductions.  In the year since the launch, the tool has already been used by thousands of SMEs.

One such SME is L.DROBE, a small UK-based business in the clothing industry. Thanks to the Business Carbon Calculator – paired with the SME Climate Hub’s suite of tools for education, action, and reporting – L.BROBE was able to begin its climate journey by gaining an understanding of its emissions and using that knowledge to inform its reduction work.

In addition to legislative requirements, businesses are also faced with customer, investor, and employee demands to account for and report their carbon emissions. This means that carbon accounting is not only essential to staying compliant, but also for minimising business risks and enhancing competitive advantages.

In other words: savvy businesses are using carbon accounting to go beyond box-ticking, creating business value and seizing opportunities.

An analysis by Normative has revealed that just 1,062 enterprises – together making up 0.3% of all large businesses worldwide – account for an estimated 77% of global carbon emissions from fossil fuels and industry. Moreover, all of these businesses have existing carbon reduction targets. If they are able to reach net-zero, global industry emissions would be reduced by more than three-quarters – bringing us that much closer to reaching global net-zero.

To speed up the transition to net-zero, we need to make tools and resources accessible to those businesses with limited capacity.

Supporting SMEs like L.BROBE with accurate carbon accounting is key to solving the climate crisis. We cannot meet global climate targets without bringing SMEs on board the net-zero journey. Practical tools like the Business Carbon Calculator and the SME Climate Hub are examples of the support that already exists for SMEs – now, this support needs to be scaled with the help of the large enterprises that will benefit from decarbonising their value chains.

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