The SME Climate Hub is an initiative formed by several environmental organizations to help small and medium-sized businesses cut emissions in half before 2030, and reach net-zero emissions by 2050 or sooner. In this conversation with SupplyChainBrain Editor-in-Chief Bob Bowman, Johan Falk, co-founder of the Exponential Roadmap Initiative, explains how the effort will bring together businesses large and small to achieve ambitious goals for climate action on a global scale.
SCB: Give us some details on how the SME Climate Hub will help small businesses reach net-zero emissions by 2050 or sooner. 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 hub for small to medium-sized companies — up to around 500 employees. The first step is to join the race to zero — make a commitment, which is pretty straightforward and aligned with the latest science. Second, it's to provide tools and resources to simplify the process for these companies to take action, and be able to measure their emissions. We have a road map for developing the value proposition. There are incentives for companies, such as simplifying the switch to renewable electricity. Finally, they’ll be able to disclose progress in a much simpler way than they can do today, through different types of reporting.
SCB: Can you be more specific about the types of tools that will be made available to SMEs for this purpose?
Falk: As an example, there are already tools like climate calculators and different ways of estimating your ambitions and guides as to which actions you can take. But the idea is also to develop and launch a more automated type of calculator. So depending on which sector you’re in, whether retail, manufacturing or consulting, you can get advice from the beginning on the key actions that might be good to start with.
SCB: One possibility is the use of alternative fuels. What are some other potential steps that companies can take in order to move toward the net-zero emissions goal?
Falk: It’s split between looking at your own emissions, over which you have direct control, and what we call value chain emissions from suppliers, as well as users of your products downstream. Say you start with your own emissions. Most companies have some kind of office facility, so you’d be looking at energy usage there, and switching to renewable electricity. That's a straightforward step in a lot of countries. Another action is to assess how efficient is your use of space. Are you leaving the office empty 80% of the time during the pandemic? Do you need so much business travel? Can you reduce unnecessary in-person meetings, and use virtual meetings instead? When it comes to vehicles that you own, can you start switching over to electric power? And if you’re running a factory, you need to look at such things as cooling and heating.
SCB: What about on the supplier and customer sides?
Falk: You can look at the types of material you’re sourcing. You can ask suppliers to switch to low-carbon products, move away from those that generate high emissions. In the downstream direction, you can measure the energy usage of a particular product or service, and reduce that.
SCB: Does it extend all the way to product design?
Falk: Yes. In clothing, for example, you can design for longer life, repairability and circularity. We recommend to companies that they don’t just leave it at your own emissions, but look at the complete picture. Then decide which actions make the most sense to take, and in which order.
SCB: Based on your experience, what do you imagine would be the biggest challenge for a small to medium-sized enterprise in reaching these goals?
Falk: The biggest challenge for small companies is limited resources, especially time. They need to be spending their major efforts on developing the business. So we need to make it as simple as possible for them to get a good picture and take action. I don’t think small companies should necessarily follow the same path as big ones. They need to understand which actions are most beneficial for the business.
SCB: Will this effort initially be limited to the U.K.?
Falk: It's actually a global effort. We have commitments from 70 countries today, which is great. The U.K. in particular has taken the lead in terms of making a lot of investments and creating a campaign for the SME Climate Hub. But our intention is to start duplicating that for more regions.
SCB: How can larger companies help?
Falk: We’re working 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 tough targets. They realize the need to work closely with their suppliers, not just put requirements on them. They can actually motivate their smaller suppliers to sign up with the SME Climate Hub and also provide support through that general resource. The key strategy that we’re developing together is for larger companies to support their smaller suppliers to take climate action.
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