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UN to support SME climate action

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The COP28 Presidency in collaboration with the SME Climate Hub and We Mean Business Coalition (WMBC), have launched a campaign to help small and medium-sized enterprises (SMEs) in the Middle East and North Africa (MENA) implement net-zero strategies.

  • The SME Climate Hub provides small and medium-sized enterprises with free resources to help reduce emissions.
  • By making the SME Climate Commitment, businesses are counted in the United Nations’-backed Race to Zero campaign.
  • The SME Climate Hub is now available in Arabic for the first time.

The campaign by COP28 & SME Climate Hub for MENA was developed to elevate the role of SMEs in the climate process and has made the SME Climate Hub available in Arabic. Through the collaboration with the COP28 Presidency, the SME Climate Hub will expand its reach in the MENA region which, like many economies, relies on the resilience of its SMEs.

Launched in partnership with Abu Dhabi Future Energy Company – Masdar and supported by First Abu Dhabi Bank and the Abu Dhabi Chamber, COP28 & SME Climate Hub for MENA will help businesses with under 500 employees to make a globally recognized climate commitment and be counted in the United Nations’-backed Race to Zero campaign. It will also provide access to free tools and resources which will allow SMEs to implement emissions reduction strategies across their businesses.

H.E. Majid Al Suwaidi, Director-General and Special Representative, COP28, said, “SMEs comprise up to 90% of all businesses in the Middle East and North Africa, hence they form a major part of the region’s economy and have an integral role to play in accelerating MENA’s transition to net zero. Expanding the SME Climate Hub’s regionalization in MENA will help us to deliver the most inclusive COP to date, support SMEs with their climate goals and ensure they are a vital part of our collective efforts to keep 1.5C within reach.”

Businesses which join the SME Climate Hub community officially commit to halving emissions by 2030, becoming net zero before 2050, and reporting on their progress yearly. By cutting emissions businesses have the opportunity to lower production costs, increase efficiency, and gain greater access to capital and markets with environmental demands and regulations. Over 6,800 SMEs across 127 different countries have already made the commitment, with a growing number from the MENA region.

SMEs in the shift to net zero

For many economies, SMEs make up a huge proportion of the economy – up to 90% – and are often responsible for the majority of employment. According to the International Labour Organisation, SMEs also employ 70% of the world’s workforce and contribute over 50% of global GDP – yet many struggle with the transition.

In the UK alone, SMEs account for 99.9% of UK enterprises and are responsible for between 43% and 53% of UK business emissions (around one third of total UK emissions). There are 5.5 million SMEs in the UK, most of which are small businesses with up to 49 employees. Yet 4.5 million have not yet set net zero targets.

The UK Climate Change Committee has pointed out that SMEs need joined-up, cross-departmental policy making to address the common net zero challenges that small businesses face – particularly upfront financing and time and knowledge constraints.

This plan must include better coordination of activity delivered through regional development funding, both between regions and with national net zero policies. SMEs need access to financing support, information on regulations, footprinting and audit services, as well as peer learning networks. That’s true for SMEs in every environment.

Earlier in 2023 the WMBC agreed a partnership between B Lab and the SME Climate Hub, to develop tools and guidance for SMEs. With more than 6,500 Certified B Corporations (B Corps) across 89 countries, B Lab brings expertise in economic systems change as well as learnings on the most effective standards, policies, and tools to shift company behaviour and culture.

This will see more small and medium-sized businesses signposted to essential guidance on how best to take climate action and build resilience, further accelerating the growing wave of new net zero commitments from this sector of the economy.  Translating that into Arabic is a useful first step towards integrating SMEs in the MENA region into global climate actions.

Many SMEs are already starting to action, most initially focusing on relative straightforward (and cost efficient) options such as the management of waste, the reduction of energy consumption and the education of its work force. But SMEs face multiple challenges.

Challenges facing SMEs

February 2023 saw the publication of the SME Climate Hub’s second annual Small Business Climate Action: Barriers and Bridges study looking at the drivers and barriers for SME climate action. It found that while 80% of respondents said that they are taking action on climate as it’s the right thing to do, 70% say they require additional funds to take action or speed up progress to reduce emissions.

More problematic is the fact that nearly 3 in 5 say lack of climate skills and knowledge is preventing them from taking more ambitious action on climate. They also struggle with the time needed to implement action and accessing the resources they need to deliver effective change.

Interestingly only 23% of respondents had been asked to reduce their emissions, but as regulation across jurisdictions continues to be deployed, this is likely to change rapidly. As demand changes, so will client requirements – large companies that are required to report on emissions footprint and reductions often have many thousands of smaller suppliers but they can only get their own numbers if they can access that data from the supplier in question. Action on climate change is rapidly shifting from a nice to have marketing advantage to a cost of doing business overall.

Integrating SME focus into COP28

This year’s Conference of the Parties to the UN Framework Convention on Climate Change, taking place in Dubai, is expected to be pivotal in how tackling climate change is addressed. Whether this is finalisation of the terms of regulated carbon offset markets, action on loss and damage, accelerating climate finance or agreeing the phase out of fossil fuels, the decisions made here will have implications for economic operations around the world. No economy can afford to leave SMEs out of the conversation.

The Presidency’s key focus areas this year are “fast-tracking the energy transition and slashing emissions before 2030; transforming climate finance, by delivering on old promises and setting the framework for a new deal on finance; putting nature, people, lives and livelihoods at the heart of climate action and mobilising for the most inclusive COP ever.”

H.E. Razan Al Mubarak, UN Climate Change High-Level Champion, COP28, said: “Climate action is an all-of-society mandate and endeavour. Businesses of all sizes are essential in accelerating our green transition to a net-zero, nature-positive future. At the same time, a robust climate strategy benefits companies by unlocking growth opportunities and future-proofing their businesses. The MENA SME Climate Hub will be a turning point for small and medium-sized businesses in the region to commit to a recognised climate goal, access practical tools and resources, and build business resilience.”

SGV Take

Though any one company’s impact may seem small, together small businesses are essential in driving the net zero transition. Access to guidelines and support, information about options, processes and approaches to implementing change will help SMEs on their journey.

Much of the focus of research and support to date has been on energy intensive industries operating in manufacturing sectors (eg metal, textiles, chemical and petrochemical industries, transport – but far less on non-energy intensive SMEs including small and/or family-owned businesses based in local communities, which also have to address their impact.

SMEs are going to play a vital role in ensuring that countries achieve their net zero targets – that means integrating businesses into the net zero transition is fundamental to achieving global climate goals. SMEs in every region must be part of this effort.

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