Small and Medium Enterprises (SMEs) account for over 95% of all businesses. They account for most of the wealth, employment creation, social and environmental impacts, and private sector gross domestic product.
Transitioning to a net-zero economy does not happen if 95% of all businesses are operating as normal. On tackling the climate crisis, widescale buy-in and action from SMEs is essential.
There are several perceived obstacles stopping SMEs taking on new projects to improve their environmental performance. One long standing argument is that action costs money upfront; more than a third (34%) of SMEs say they used cash reserves to make improvement on their environmental performance (according to a study by Lloyds Bank Commercial Banking’s Business Barometer of SMEs).
Using cash reserves will be even less appealing in the context of the last 13 months. SMEs have been hit hard by the pandemic; over two-fifths of SMEs have seen sales decrease in the past 24 months and just under a third have cut jobs. In this context, it would be understandable for organisations to reprioritise and delay environmental action.
A world in a post-pandemic recovery may then seem like the worst time for SMEs to invest in taking climate action. However, there is argument that the time has never been better, and necessary.
In a post-pandemic world action on climate change presents the opportunity to be braver and more agile in decision making. Much like the pandemic has in the short-term, climate action in the long-term facilitates better management of priorities of stabilising businesses and protecting employees.
SMEs do have an impact on climate change, they can take meaningful yet affordable action, and they will have to adapt as we transition to a net-zero economy. If the pandemic is anything to go by, there is every reason to believe they will also thrive whilst doing so.