**London**: As sustainability regulations tighten, small and medium-sized enterprises (SMEs), which make up 99.8% of UK businesses, are urged to enhance their role in decarbonisation efforts amidst low participation in formal reporting and procurement practices that favour sustainability.
As sustainability regulations become more stringent across sectors and consumer preferences shift towards greener practices, small and medium-sized enterprises (SMEs) are beginning to recognise their pivotal role in decarbonisation efforts. Despite constituting 99.8% of all businesses in the UK and providing nearly 60% of private sector employment, a mere 7.7% of SMEs have established formal sustainability reporting programmes. This disconnect is highlighted in a recent survey by the SME Climate Hub, which revealed that only 17% of SMEs have been prompted by their larger corporate customers to reduce emissions.
Mauro Cozzi, CEO and Co-founder of Emitwise, emphasised the potential of SMEs to impact decarbonisation during a recent interview, stating that “every supplier choice affects your carbon footprint.” He outlined how procurement decisions can drive significant changes in emissions levels. The CDP has noted that Scope 3 emissions, typically arising from the supply chain, are 26 times greater than a company’s operational emissions, suggesting that even modest changes in procurement practices can lead to large-scale environmental benefits.
The misconceptions surrounding the ability of SMEs to influence carbon emissions were discussed extensively. For example, some SMEs believe that their procurement functions lack the capacity to affect carbon outputs. However, Cozzi pointed out that choosing sustainable suppliers, utilising low-carbon materials, or opting for local vendors instead of those overseas can significantly decrease a company’s environmental impact. Furthermore, he highlighted that large corporations, in their quests for sustainability, are increasingly demanding carbon emissions data from their suppliers, including SMEs. Failing to demonstrate progress in sustainability could result in the loss of contracts and new business opportunities for SMEs.
Cozzi addressed another common belief: that SMEs lack the resources needed to measure their carbon emissions effectively. He reassured that practical, low-cost methods are available for SMEs to begin monitoring their emissions, particularly in relation to Scope 3. Two straightforward approaches include a spend-based method that estimates emissions based on spending patterns across various categories and an average data method that utilises industry-wide emissions averages to provide a general overview. Both methods serve as stepping stones for businesses just beginning their sustainability journeys.
For those SMEs ready to delve deeper into their emissions tracking, more sophisticated strategies such as hybrid approaches or collecting supplier-specific data can be employed. Cozzi noted that small actions—like requesting emissions data from key suppliers—can dramatically enhance transparency in the supply chain and facilitate collaborative improvements in sustainability practices.
Another point addressed was the misconception that sustainable procurement is exclusively for larger corporations. Cozzi reiterated that while larger businesses may face stricter regulations, SMEs must also respond to market demands for sustainability from consumers, investors, and larger clients. By incorporating sustainability into their procurement practices, SMEs can not only comply with market expectations but also reap additional benefits such as cost savings, new business opportunities through partnerships with larger enterprises prioritising low-emission suppliers, enhanced reputation among eco-conscious customers, and long-term resilience against increasingly stringent regulations.
In summary, the message is clear: SMEs are crucial players in the sustainability landscape, and their procurement decisions can profoundly influence their carbon footprint. By embracing small, actionable steps—such as gathering emissions data, engaging suppliers on sustainability, and making incremental improvements—SMEs can enhance their operational efficiency while positioning themselves competitively in an evolving market increasingly favouring environmentally conscious practices.
Source: Noah Wire Services
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