How Small Businesses Can Have a Big Impact in the Climate Fight
We frequently concentrate on the Chevron and ExxonMobils of the world when we consider the businesses that are accountable for carbon emissions. However, almost every business has a carbon footprint. And each can contribute to resolving our global issue.
“Small actions on a local level add up,” says Fran Teplitz, executive co-director of business, investing, and policy at the Washington, D.C.-based Green Business Network. “We’re big advocates of doing what you can, based on who you are and where you are.” This domino effect has the potential to build positive momentum across business sectors.
The majority of global emissions may be traced to a tiny group of the largest corporations in the world, despite the fact that small and medium-sized businesses account for about 90% of all businesses globally. But no small business exists in a vacuum. The world is interconnected. Smaller businesses are used by the powerful multinationals with extensive value chains for things like raw materials, packaging, production, and marketing. “All of those things have a carbon footprint,” says Rob Fisher, the head of KPMG’s IMPACT group, which focuses on environmental, social, and governance (ESG) criteria, and sustainability.
The sustainability gains from a small business can cascade to the larger value chain, according to Fisher, because a small company’s Scope 1 emissions (from their direct operations, like the gas used in vehicles, might be part of a larger corporation’s Scope 3 emissions (from indirect activity, like buying raw materials)). (These worldwide scope standards are based on the GGP; scope 2 is the energy a corporation purchases.)
Then there’s the legal side of the coin. Since the U.S. Securities and Exchange Commission proposed new rules in March that would require firms to disclose climate change risks, any public company (even if it’s small-ish) might be required to consider their impact. Bonus reason to take action? “Small businesses have less resilience than larger corporations,” says Teplitz, and have less cushion to absorb the hardships caused by climate change—like droughts, hurricanes, or weather-related supply-chain hiccups. These can be both economic and existential threats for a business, and reasons to care.
A drive to reduce emissions could help land even juicier clients. Small- and medium-sized businesses have an opportunity to “disrupt their competition,” says Fisher, by demonstrating to larger corporations—who have their own sustainability goals—that they are committed to reducing emissions. “If I’m moving the fastest to eliminate my carbon footprint, maybe I can appeal to the larger companies that can put me in their supply chain,” he says.
Zooming out, Fisher believes that this pivot to a lower-emission business model is a physical transformation that will rival the digital transformation of the 2010s, and provide the same kind of upside to savvy companies. Ultimately, Fisher sees this transformation as “the dominant economic driver for the next 20 to 30 years.” And that economic driver is open to all—big or small.