Free SME Climate Disclosure Framework is designed to help small and medium-sized firms around the world track progress against science-based climate goals
CDP has this morning launched a new climate disclosure framework designed to help small and medium-sized enterprises (SMES) set climate targets and then track their progress against those goals.
The SME Climate Disclosure Framework, which has been developed in collaboration with the SME Climate Hub, aims to help smaller companies establish climate targets aligned with a 1.5C trajectory, CDP said.
While the adoption of net zero targets has to date been largely driven by large corporations, SMEs are under growing pressure from their investors, employees, and the larger companies they work with to measure, report, and reduce their emissions. Many leading corporate are now adopting plans to reduce emissions from their supply chains and are routinely writing to the smaller businesses they buy products and services on to call on them to set science based emissions targets and develop net zero strategies.
Environmental campaigners hope SME engagement with the net zero transition can help to accelerate global emissions reductions, given SMEs collectively account for 90 per cent of businesses and 50 per cent of employment worldwide, according to OECD data.
However, smaller businesses can frequently lack the capital and expertise required to develop and execute effective decarbonisation strategies.
As such CDP said the new tool would help improve SMEs’ ability to report their climate impacts and strategies to multiple stakeholders, while “providing a foundation” for simplified reporting tools through the SME Climate Hub – the platform launched in 2020 by the Exponential Roadmap Initiative, We Mean Business Coalition, and Normative.
Sonya Bhonsle, global head of value chains and regional director of corporations at CDP, said it would be impossible to limit global temperature rise to 1.5C without the efforts of SMEs.
“We are delighted to have launched a framework in partnership with the SME Climate Hub that caters specifically to the sustainability reporting needs of SMEs,” she said. “We hope the framework empowers SMEs to take climate action, and in turn, increases their resilience to climate change and allows them to play an active role in the transition to a low carbon economy.”
CDP said it had consulted with SMEs and their stakeholders to produce the final framework, which sets out key climate-related reporting indicators and metrics that companies should be reporting on. It said it had opted for a modular design for the tool in a bid to give SMEs and data requesters the ability to tailor its use to their disclosure needs.
Maria Mendiluce, CEO of the We Mean Business Coalition, which represents large corporates around the world, said the tool would help the growing number of SMEs globally that have already set emissions reduction goals. More than 3,000 companies have joined the SME Climate Hub, which requires firms to commit to halving their emissions by 2030 and reaching net zero emissions by 2050 or sooner, she said.
“With scalable, accessible tools like the CDP reporting framework, these businesses can move from commitment to action, and effectively track progress to meeting our collective ambition,” she said.
Normative CEO Kristian Rönn said the framework had been specifically designed to help companies with smaller budgets and fewer staff reach net zero emissions. “We recognise that small companies have limited finances and resources,” he said. “That’s why we are developing free tools to engage SMEs in the race to net zero, helping them calculate, understand, and reduce their emissions Because. we know that in the end, what gets measured gets managed.”