New climate disclosure framework launched to help SMEs on road to net-zero
CDP and the SME Climate Hub have launched a new framework to help SMEs measure, report and reduce their climate impacts, amid growing concerns that they are facing numerous decarbonisation barriers that do not impact large firms as much.
Launched today (25 November), the tool is called the SME Climate Disclosure Framework and will help SMEs in all sectors to measure and report their own direct (Scope 1), power-related (Scope 2) and indirect (Scope 3) emissions. Also included in the tool are the definitions for more complex emissions and climate terminology, plus tailored advice for reducing emissions in line with climate science, taking into account SMEs’ size and sector.
The Exponential Roadmap Initiative and Normative contributed to the development of the tool, alongside CDP and the SME Climate Hub.
The creators of the framework have stated that more and more SME suppliers are being asked to measure, report and decrease their emissions by the large companies who source from them. Corporates are increasingly setting Scope 3 targets and, indeed, will need to do so to have targets verified in line with 1.5C or Net-Zero by the Science-Based Targets Initiative (SBTi).
There are also increasing demands for sustainability from stakeholders including investors and individual consumers. Moreover, CDP and the SME Climate Hub are highlighting the fact that governments may choose to increase disclosure and decarbonisation requirements for SMEs in the coming years, expanding mandates already placed on corporations.
As well as pressures, the organisations are highlighting the opportunities for SMEs accelerating the low-carbon transition, including increased investment; contribution to sustainable development in emerging economies and the ability to develop and test emerging innovations.
Currently, around 1,800 SMEs disclose climate information through CDP. It is hoped that the new framework will help to increase uptake. The SME Climate Hub covers some 3,000 businesses and has stated that it will use the framework as a “foundation” for simplifying reporting tools on its site.
The framework is modular, meaning that SMEs can complete as many or as few sections in one sitting as they want to. However, there are some minimum reporting requirements. A draft version was tested earlier this year.
Normative’s chief executive and co-founder Kristian Roenn said: "To limit global temperature rise to 1.5°C and prevent the most catastrophic effects of climate change, every business needs to achieve net-zero emissions, but we recognize that small companies have limited finances and resources.
“That's why we are developing free tools to engage SMEs in the race to net zero, helping them calculate, understand, and reduce their emissions. Because we know that in the end, what gets measured gets managed."
A recent report from the British Business Bank, which polled 1,200 decision-makers at SMEs on their approach to reducing emissions, found that 76% are yet to implement comprehensive decarbonisation strategies. Barriers include a lack of in-house environmental expertise and limited finance.