4-step guide for climate action in SMEs

  • 4-step guide for climate action in SMEs

    *Annexes available in Spanish
    Increasingly, SMEs will have to face pressure to reduce their carbon footprint and report their alignment with Spanish and Europe's climate goals. Preparing a Climate Action Plan in advance will serve to strengthen their competitiveness and create new business opportunities.

    Furthermore, eliminating the consumption of fossil fuels throughout their chain of activities also offers advantages for SMEs by reducing operating costs and, in general, increasing their resilience and self-sufficiency under future energy crises. According to a survey carried out by Climate Strategy with over 300 Spanish SMEs, 78% of them have suffered the impacts of the current energy crisis. Therefore, starting a decarbonization trajectory is essential to mitigate and avoid these types of risks.

    In 2022, Climate Strategy & Partners presented at COP27 the first study on the progress of climate action in Spanish SMEs and their response to the impacts of the current energy crisis. This study includes an extensive best practice guide tailored for SMEs to develop and implement a science-based Climate Action Plan towards net zero emissions.

    In 2023 Climate Strategy has worked on simplifying this guide to produce a new infographic that illustrates the 4 key steps that an SME ought to take to reduce its carbon footprint and associated costs such as energy consumption and other resources. This infographic also includes a series of annexes that facilitate access to free tools to support SMEs in each of these steps.

First Step: Calculating the carbon footprint

  • The infographic details the three different scopes in which the greenhouse gas emissions of a company are classified, and thus facilitate the use of the tools available to calculate the emissions of an SME found in Annex 1..
  • The infographic highlights two possible paths for SMEs to begin calculating their carbon footprint.
    • The first option that may be the most efficient in terms of time and costs for SMEs is to consult with their accountants about the possibility of contracting their services to calculate the company’s carbon footprint. Accountants can quickly and easily calculate the carbon footprint of their clients by having all the financial information necessary to do so (such as energy bills, business travel bills, etc.).
    • The second option is to directly use the calculators available online (either together with the accountant or on their own) that can be found in Annex 1 with more information about each tool such as the scopes it covers and the data required

Second Step: Identify actions to reduce the company’s carbon footprint

  • For SMEs to embark on an effective decarbonization path, it is necessary for them to first know the state of their carbon footprint, to then take the proper actions to reduce it. This will require establishing emissions reduction objectives and implementing actions to reduce them within the different activities of the company.
    • The United Nations, the European Union and the Spanish government are committed to the 2015 Paris Agreement objective to limit the rise in global warming to below 1.5°C compared to pre-industrial levels. In 2021, Spain formalised this goal in its first Climate Change and Energy Transition Law. The main international initiatives focused on the validation of climate objectives in SMEs follow these scientific guidelines and call for a 50% reduction in company emissions by 2030 or earlier, and a commitment to net zero emissions before 2050 (with at least 90% of emissions reductions and offsetting the remaining emissions permanently).
    • To achieve these climate objectives and align with the international and European stage, it is necessary for SMEs to start their climate action activities as soon as possible. We identify 6 main areas where SMEs can act to reduce emissions throughout their value chain: Energy Efficiency, Eco Transportation, Renewable Energy, Ecodesign, Waste Circularity, Green Suppliers. Annex 2 identifies the actions that can be carried out in each of these areas in more detail.
    • The compensation of emissions should be secondary to their reduction and only used on a voluntary basis for those emissions that were not eliminated in the specified year. Furthermore, the goal of net zero emissions before 2050 only allows for a maximum offset of 10% of residual emissions.

Third Step: Identify the financing available to implement decarbonization actions

  • 48% of the more than 300 Spanish SMEs surveyed by Climate Strategy identified the lack of financing as a barrier to carry out more ambitious climate action. This infographic and its Annex 3 identify the public and private sustainable financing options available for SMEs and the tools to access them.
    • A simple first step available to SMEs is to engage with the bank they work with, as the majority of banks have announced ambitious commitments to mobilise sustainable financing in areas which support businesses, such as energy efficiency in buildings, installation of renewable energy, purchase of electric vehicles, among others. Annex 3 shows examples of these commitments.
    • On the other hand, Annex 3 also shows different tools that facilitate the search for subsidies, particularly those linked to the Spanish Recovery and Resilience Plan, and pertain to the decarbonization projects for SMEs.

Step Four: Disclose annual progress on the decarbonisation trajectory

  • The last step for an SME focuses on transparency: annually disclosing its Climate Action Plan with a series of indicators on its progress in achieving set decarbonisation objectives. This will make the SME's efforts visible to its stakeholders and to its large clients who will increasingly require greater climate data/action from it. In addition, it is important that every plan is evaluated on an annual basis to guarantee its effectiveness.
    • Some of the indicators that must be included for a complete evaluation are: the base carbon footprint, the objectives established to reduce it, the reduction of the footprint achieved that year against the agreed objectives, the set actions that have been carried out to reduce it, the financing used, the residual emissions compensated and the future actions and investments planned to adapt the SME's business model in a long term horizon.
    • There are different online tools (some of them sector oriented) to facilitate the drafting of this report. These are included in Annex 4.

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