At first glance, much of the sustainability and net zero discussion involves large enterprises. But take a closer look, and small businesses must also prepare sustainability strategies to address forthcoming ESG (environmental, social and governance) and carbon footprint mandates.
Among the warning signs:
- One-third of SME (small and midsize enterprise) suppliers that do not currently need to report on ESG believe they will have to do so within the next five years, according to research from BDC focused on Canadian entrepreneurs.
- Small to medium businesses (SMBs) that work with the U.S. federal government will need to ultimately meet Scope 1 and Scope 2 emission disclosure mandates, according to research from Persefoni.
Net Zero Guide for Small and Midsize Businesses
Amid that backdrop, Lloyds Bank introduced "From Now to Net Zero: A Practical Guide for SMEs." The five-step journey to success, according to Lloyds Bank, involves:
- Getting Started: 9% of SMEs are at this stage. Key barriers to success here involve knowledge, control, finance and time.
- Engagement and Action Today: 15% of SMEs are at this stage. One of the most direct and straightforward steps that a business can take to reduce its carbon footprint is to switch to a renewable energy provider, the report said.
- Measure, Mobilize, Monitor: 28% of SMEs are at this stage. At this stage, you will measure your carbon footprint, mobilize your plan from step two, and monitor your impact going forward, the company said.
- Navigating the Road Ahead: 36% of SMEs are at this stage. Here, you need to keep pace with developments outside of your own operations and supply chain, such as government regulations, the report said.
- Heroes of Net Zero: 7% of SMEs have reached this stage. Here, you can start mentoring other SME organizations that are beginning or refining their net zero journeys.
That only adds up to 95%. So what's missing? The other 5% involves companies that are not considering or taking any actions toward reaching net zero.