Pamela Jouven, Director of the SME Climate Hub on how SMEs can decarbonize

As countries continue working to limit global warming according to the Paris Agreement, most recently with the landmark UAE Consensus reached at COP28 to transition away from fossil fuels, small businesses are realizing they have a big opportunity to make a significant impact. But lowering carbon emissions can also be a significant challenge for small and medium-sized enterprises (SMEs).

Pamela Jouven, Director of the SME Climate Hub, an online platform for small and medium-sized enterprises, talks about the Hub’s work to accelerate a global movement and mobilize SMEs to take climate action – and why that action is critical for the planet.

How does sustainability align with your strategy?

We support small and medium-sized businesses on their climate action journeys by providing them with free tools and resources to reduce their carbon footprint. We also invite businesses to make the SME Climate Commitment and be recognized by the UN’s global Race to Zero campaign by halving emissions by 2030, reaching net zero by 2050, and reporting on their progress each year. More than 7,500 SMEs from over 130 countries have made the commitment so far.

The SME Climate Hub is an initiative of the We Mean Business Coalition, a global nonprofit that had historically worked with larger corporations to halve global emissions by 2030. But the crucial role SMEs play in reducing global greenhouse gas emissions has become increasingly apparent: 90% of companies globally are small or medium-sized enterprises, employing 70% of the world’s workforce and contributing over 50% of global GDP.

SMEs also have a more local customer base, staff and supply chain, making them more vulnerable to the impacts of climate change. To create more resilient communities, SMEs need to be able to weather these changes, while we work to keep global temperature rise in check – but they need support.

What do you see as the most important opportunity to focus on in the sustainability space?

To reach net zero, we need small and medium-sized businesses to make consistent progress toward global targets. At the same time, we must not put a disproportionate burden on the businesses that have the least resources to navigate the energy transition. Governments, corporations, civil society and industry associations all need to come together to support them.

Over 80% of the SMEs we survey annually say they want to take action but need financial resources, tools for action, regulatory support and even support from their investors and customers. 61% of those surveyed told us their customers – whether corporate partners or individuals – were not asking them to reduce emissions. If corporations and governments want to meet their own climate goals, they need to bring their entire supply chain and constituents on board.  

How are you involving stakeholders in your sustainability efforts?  

We’re working with a diverse set of stakeholders to help us reach SMEs with the information they need, build out support and incentive systems, and streamline the commitments we are asking them to make or the data we are asking them to disclose. Through a partnership with the COP28 Presidency, First Abu Dhabi Bank and Masdar, we began to mobilize SMEs in the Middle East and North Africa and created a version of the SME Climate Hub digital platform in Arabic. We’ve also expanded our footprint in the UK and US and launched recruitment campaigns and regionalized programs in Latin America, the Caribbean and India.  

When engaging corporations in the mobilization of their supply and value chains, we’ve seen increasing progress. Last year, we launched a partnership with IKEA’s largest retailer, Ingka Group, to share the SME Climate Hub resources with its SME customers. And we’re working with multinational corporations and the finance industry to boost access to incentives that support SMEs’ low-carbon transition. 

How are you fostering innovation in sustainability?  

We’re already seeing thousands of companies taking climate action because they know it’s critical to protect their bottom lines. With the right resources to take climate action, SMEs can reduce costs from long-term climate impacts, improve efficiency and create a healthier environment for their operations and communities. Businesses are also realizing more and more that customers, investors and governments are now looking for companies that have a lower environmental footprint.  

Key to supporting SMEs in their decarbonizing efforts is innovative financing, and we are also working with financial institutions to develop tools such as preferential loans and terms for SMEs that are taking climate action. 

In what areas do you see other sustainability-related opportunities?  

The SME Climate Hub and the We Mean Business Coalition are working with more corporations around the world to mobilize even their smallest suppliers toward climate action, including a supplier cascade campaign calling on corporations to help their suppliers reduce emissions. In addition to providing free tools and resources, we work with large corporations to incentivize their smaller suppliers. This can mean beneficial contracts for companies that are taking action or procurement requirements prioritizing businesses that are targeting emissions reductions.  

Companies and governments are increasingly calling for a phase out of fossil fuels. We recently worked with Netflix to create our Action Courses, which offer guidance for EV adoption within the film and television production sector – an approach we’re planning to replicate in other industries. By moving toward clean energy solutions across businesses of all sizes and fostering essential collaborations in supply chains, we can drive larger change throughout entire systems and industries.