As climate change worsens and goes from distant threat to daily reality, an all-hands-on-deck effort is an absolute necessity. However, while large corporations are often in the spotlight for their contributions to the race to Net Zero, more attention needs to be paid to small- and medium-sized enterprises (SMEs).
Indeed, making up 90% of businesses globally and accounting for 60% of GDP in the MENA region, SMEs are an essential engine to the sustainable transition. Their greater agility and adaptability allow them to implement sustainable practices more rapidly and effectively; open to experimentation and innovation, they’re fertile grounds for developing new green technologies, be it energy-efficient products or eco-friendly production processes; deeply embedded in and engaged with local communities, they can have a more direct influence on their immediate environment and raise environmental awareness at the grassroots level; and, most importantly, many SMEs are involved upstream and downstream of large companies’ value chains, carrying a significant carbon footprint responsible for Scope 3 emissions.
Understanding SMEs’ Climate Challenges
Yet, many SMEs are still struggling with balancing out their own business priorities and a climate action that they, too, care deeply about. In fact, a 2023 global survey by SME Climate Hub – the only climate action platform specifically dedicated to SMEs and backed by the United Nations’ Race to Zero – reveals that SMEs are particularly vulnerable to the effects of extreme weather, “given their localised supply chains, centralised infrastructure, and dependence on the communities in which they operate,” says the report.
The survey’s findings are edifying. Most SMEs operate on tight budgets, which often hinders their ability to implement sustainable practices, set up a sustainability team, switch to renewable energy, or invest in energy-efficient infrastructure. Therefore, it’s not surprising that nearly 70% of respondents said they need funds to act or speed up progress towards emissions reduction.
In addition, limited access to information and technical expertise can also be a barrier to their sustainability efforts, with 58% saying they lack the necessary skills and knowledge. As a result, SMEs account for at least 50% of global business sector emissions today and only 8% of them have a Net-Zero-by-2050 target in place.
This doesn’t mean that these businesses are reluctant to act, quite to the contrary. In an online survey conducted by adsmehub, a massive 79% of respondents said they are proactively thinking of making their business more sustainable, while 14% said they’re not and 7% are not sure.
Many small business leaders are ready to work on cutting their emissions for a number of reasons – from simply doing the right thing to enhancing their business’ reputation. They also realise that ESGs can become a pathway to cost reductions, increased productivity, and strengthened business resilience. They just cannot do it alone.
Bridging the Knowledge Gap
This is why, in line with the UAE’s objective to host the most inclusive COP to date, the COP28 Presidency has joined forces with SME Climate Hub in October to launch the COP28 & SME Climate Hub for MENA programme. This collaboration enables participating SMEs from the region to officially join the United Nations’ Race to Zero campaign by pledging to halve their emissions by 2030, achieve Net Zero by 2050, and report on their progress yearly.
One of the first global sustainability platforms of its kind available in Arabic, as well as English and Spanish, COP28 & SME Climate Hub for MENA equips participants with free and comprehensive resources to bridge their knowledge gap, take action, and measure progress.
For example, businesses can use the Business Carbon Calculator to estimate their full carbon footprint via a detailed, personalised dashboard; a reporting tool has been specifically designed for SMEs to create a full climate report that can be integrated into their annual business reports, shared on their websites, or directly distributed to customers and funders; Climate Fit is a highly interactive online training course to teach SMEs how to reduce their carbon emissions in seven achievable steps.
A full array of information, measurement, and reporting tools will help MENA businesses make concrete progress towards emissions reductions, in line with scientific benchmarks. And, once the conference is over, Masdar, with the support of First Abu Dhabi Bank, will continue recruiting regional SMEs to the Hub, ensuring it becomes a legacy support platform and a focal point for their sustainability activities in MENA.
SMEs are essential in driving change in the MENA region and beyond. Working with them to limit global temperature rise within 1.5C is a moral and economic imperative. Initiatives such as COP28 & SME Climate Hub for MENA should help them kickstart their journey to reduce emissions and retain their competitive edge in a fast-changing environment.