The SME Climate Cluster is an initiative formed by several environmental organizations to help small and medium-sized businesses cut their emissions in half by 2030 and achieve net zero emissions by 2050 or earlier. In this conversation with SupplyChainBrain Editor-in-chief Bob Bowman, Johan Falk, co-founder of Exponential roadmap initiative, explains how this effort will bring together businesses large and small to achieve ambitious global climate action goals.
SCB: Give us some details on how the SME Climate Hub will help small businesses achieve net zero emissions by 2050 or before. What specific actions and resources will be deployed to make this possible?
Falk: The idea is for the SME Climate Hub to provide a one-stop-shop for small and medium-sized businesses – up to around 500 employees. The first step is to join the race to zero – make a commitment, which is fairly straightforward and aligned with the latest scientific advances. Second, it is about providing tools and resources to simplify the action process for these companies and to be able to measure their emissions. We have a roadmap to develop the value proposition. There are incentives for businesses, such as simplifying the switch to renewable electricity. Finally, they will be able to disclose progress in a much simpler way than they do today, through different types of reports.
SCB: Can you be more specific on the types of tools that will be made available to SMEs for this purpose?
Falk: For example, there are already tools such as climate calculators and different ways to estimate your ambitions and guides on what actions you can take. But the idea is also to develop and launch a more automated type of calculator. So, depending on what industry you find yourself in, whether it’s retail, manufacturing, or consulting, you can get early advice on what key actions might be good to start with.
SCB: One possibility is the use of alternative fuels. What other potential steps can companies take to move towards the goal of net zero emissions?
Falk: It’s torn between looking at your own emissions, over which you have direct control, and what we call the value chain emissions of the suppliers, as well as the downstream users of your products. Suppose you start with your own shows. Most businesses have some sort of office facility, so you should look at the energy use there and switch to renewable electricity. It is a simple step in many countries. Another action is to assess the efficiency of your use of space. Do you leave the office empty 80% of the time during the pandemic? Do you need so much business travel? Can you cut down on unnecessary in-person meetings and use virtual meetings instead? As for the vehicles you own, can you start going electric? And if you’re running a factory, you need to consider things like cooling and heating.
SCB: What about suppliers and customers?
Falk: You can look at the types of materials you are looking for. You can ask suppliers to switch to low carbon products, to move away from those that generate high emissions. Downstream, you can measure and reduce the energy consumption of a particular product or service.
SCB: Does that extend to the design of the product?
Falk: Yes. In clothing, for example, you can design for longer life, repairability and circularity. We recommend that companies don’t just stick with their own shows, but look at the big picture. Then decide which actions make the most sense and in what order.
SCB: Based on your experience, what do you think would be the biggest challenge for a small and medium-sized business to achieve these goals?
Falk: The biggest challenge for small businesses is limited resources, especially time. They must devote their main efforts to the development of the company. So we need to make it as easy as possible for them to get a good image and take action. I don’t think small businesses necessarily have to follow the same path as large ones. They need to understand which actions are most beneficial for the business.
SCB: Will this effort initially be limited to the UK?
Falk: It’s actually a global effort. We have commitments from 70 countries today, which is great. The UK in particular has taken the lead by making a number of investments and creating a campaign for the SME Climate Hub. But our intention is to start duplicating this for more regions.
SCB: How can large companies help?
Falk: We work with 1.5 ° C supply chain leaders – multinationals like Ikea, Ericsson, BT, Unilever and Nestlé – to drive climate action through their supply chains. These companies have set themselves ambitious goals. They realize the need to work closely with their suppliers, and not just impose demands on them. They can actually motivate their small suppliers to sign up for the SME Climate Hub and also provide support through this general resource. The key strategy we are developing together is for large companies to help their small suppliers take climate action.