Climate change increases in priority for small business but barriers to action remain

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Climate change increases in priority for small business but barriers to action remain

A new survey indicates reducing greenhouse gas emissions grew in importance for small businesses in 2023 but that greater support from enabling policies and funding are needed.

As regulation and customer expectations increase, and climate change continues to impact small and medium sized businesses (SMEs) at a greater rate, SMEs are prioritizing taking climate action. In the past year, reducing emissions grew in priority for 44% of SMEs surveyed, and maintained the same level of priority for 53% of SMEs. 

Compared to last year’s survey data from the SME Climate Hub, SMEs are facing an 11% increase in pressure to take climate action from shareholders, investors and customers. 

Although SMEs suggest they want to take climate action, and build business resilience as a result, the survey also indicates they need more support. 

Of the 288 SMEs polled, 52% cited lack of policies or government-sponsored incentives and benefits as barriers to climate action. Insufficient funding was cited by 52% of respondents, with 39% saying lack of data about current emissions was hampering action on climate change. A lack of time was seen by 29% as a barrier to action, while 29% suggested lack of skills and knowledge were impeding their ability to act.

María Mendiluce, CEO, We Mean Business Coalition, co-founder of the SME Climate Hub, said: “In order to transition to a clean and just economy, we cannot leave behind small businesses and the communities they serve. Small businesses are the nimble changemakers we need to push climate action forward, but we need an all-of-society approach that enables this action. To successfully meet our climate action goals, collaboration across financing, government, the NGO community and large businesses is essential.

“As large corporate companies and governments increasingly call for action across their supply and value chains, they must go further, faster, to bring their small business suppliers and clients on board. This new survey from the SME Climate Hub shows that support mechanisms from governments and incentivizing programs from partners such as financial institutions and corporate supply chain leaders would enable small businesses to take more comprehensive action.”

The survey, polling SMEs across 44 countries and 25 sectors, found that executive support at small businesses had grown to match an increase in stakeholder engagement. Tangible benefits of taking climate action were also motivators for SMEs. Sixty-two per cent of respondents suggested reducing emissions had enhanced their business reputation, 53% said they had differentiated their business from competitors, with 40% saying they had achieved branding benefits and 30% suggesting they had won new customers. 

On the other hand, 84% of respondents said they had not been offered any financial incentives to reduce their emissions. Ten percent noted they would need funding to start their climate action journey; 28% said funding would help expand their climate action; and 36% suggested funding would help accelerate action. Additionally, 63% of respondents said they had not been asked by stakeholders to reduce emissions. 

Sarah Goodell, founder of the US-based branding and design small business Autumn Dahlia Creative Services said: “Taking action against climate change is not just an environmental necessity, it’s a smart business move and the right thing to do. Businesses can do good for the planet, set a great example for others to follow, and often improve their bottom line. By prioritizing the planet, businesses can increase brand loyalty among eco-conscious consumers, and find cost savings in more efficient, sustainable practices. Every company has the power to make a difference, no matter the size of their business.”

Vishakha Vidhani, founder of India-based small business Avyannaa, focussing on eco-friendly lifestyle and beauty products said:

«Substantial initial investments are often needed to implement sustainable initiatives. As we reflect on our climate action journey, we believe clear and straightforward policies and regulations are the most important lever to support small businesses to reach their climate goals.»
The survey was carried out by the SME Climate Hub, a global initiative led by We Mean Business Coalition and focused on mobilizing SMEs toward climate action. It is the third annual survey of SME Climate Hub signatories, assessing the current state of climate action among SMEs. Through its free tools and resources, the SME Climate Hub allows small and medium sized businesses to make a globally recognized climate commitment through the UN Climate Change High Level Champion’s Race to Zero campaign and access the support needed to take action on their commitment.

Notes to editors

Download the survey here.

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