In OECD countries, SMEs account for approximately 99% of all firms, 60% of jobs and over 50% of value added on average. Through their collective weight, SMEs are crucial to achieving inclusiveness, sustainability and RBC objectives, yet they trail behind large enterprises in both RBC practices and many key areas of engagement.
SMEs collectively account for at least 50% of GHG emissions of the business sector. But surveys indicate that most SMEs are still in the early stages of their journey to net zero, with only basic action taken to reduce the carbon footprint of their operations.
According to one survey, only 10% of SMEs currently measure their GHG emissions, and 22% do not fully understand the term “net zero”. Moreover, about one third have yet to seek advice or information to help them develop a net-zero roadmap or improve their environmental performance.
SMEs cite lack of access to finance as one of their most important constraints to green investment. And finance is likely to present an even larger challenge for SMEs going forward, as financial institutions seek to comply with mandatory environmental reporting requirements. Furthermore, recent developments in environmental and human rights due diligence legislation have prompted discussions on whether – and to what extent – SMEs should be subject to the same requirements as larger companies, while also highlighting the need for proportionality and reasonableness in the design of environmental governance regulations.