Legal & Regulatory News

Report published looking at the role of banks and buyers in the SME net zero transition

17 January 2023

On 17 January 2023, the University of Cambridge Institute for Sustainability Leadership, the Business for Social Responsibility, the We Mean Business Coalition and the SME Climate Hub published a report (the Report) looking at the role of banks and multi-national corporations in addressing the barriers for small and medium sized businesses (SMEs) looking to transition to net zero.

The Report identifies that SMEs account for over 99% of businesses globally. However, it suggests that only 60% of small businesses plan to reduce their carbon impact. The Report notes a number of barriers that may be hindering SMEs' ability to begin decarbonising their business activities, including a lack of knowledge surrounding sustainability; limited time to dedicate to formulating a strategy; and a lack of standardised guidance directed to their business activities.

To address this, the Report suggest that banks and large multinationals are well placed to fill this void by providing the required expertise to aid SMEs in starting their sustainability journeys and developing net zero strategies. The Report suggests a number of potential solutions to drive change and support SME net zero action, including:

  • creating a 'Climate Readiness' classification process;
  • building a centralised, shared ESG/emissions data repository between SMEs, corporates, and banks that triangulates data points for better scope-based progress reporting along supply chains;
  • producing SME-specific decarbonisation roadmaps; and
  • ensuring that financial markets provides net zero transition support services.

Click here to view the press release.

Click here to view the Report.