The power of collective SME leadership

At trace, we’ve heard from small business and startup owners time and time again, that they thought they were “too small” to become carbon neutral, or that they weren’t sure the impact would be significant or meaningful enough to justify the effort. But we don’t think this is true, and by the end of this article, we think you’ll understand why.

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There are over 2.4 million small to medium-sized enterprises (SMEs) in Australia, accounting for around 99.8% of all enterprises in the country. It’s quite likely if you’re reading this, you work for or own your own SME, as they account for almost 70% of employment across the private sector. 

So why do we focus on helping SMEs become carbon neutral at trace? Because the numbers stack up! When given the tools to do so at scale, the collective climate action of SMEs across the country (and in fact, the world) can have a huge, positive impact. Not only this, but we believe SMEs are some of the best-placed organisations to decarbonise the way they operate and offset their carbon footprint.

Why should SMEs become climate positive?‍

1. SMEs have a bigger impact than you think

From an emissions perspective, you might be surprised to know that SMEs do contribute significantly to overall business sector emissions. In similar economies to Australia, like the UK, they account for around 50% of total business emissions and therefore if we are to collectively reach net-zero, SMEs have a key role to play.

More broadly, the influence of SMEs as category innovators and trendsetters means they can also play a large part in setting the sustainability agenda for a particular industry and in turn put pressure on competitors to match or beat their commitments. We’ve seen this play out already in the home cleaning and personal care category with ‘refillables’ and ‘just add water’ products. SMEs such as trace customer The Daily Routine raise the bar on sustainability standards, putting pressure on big brands, like Unilever and Coles, to reconsider their approach to product development and packaging. 

3. Collective SME action can re-define business ‘norms’

At trace, we think the ‘norm’ should be for businesses to take responsibility for their carbon emissions and use sustainability metrics to measure success. But how do we create these new norms? 

Trace plays an important role in removing the barriers for businesses to become carbon neutral by giving them access to the tools they need. And on the flip-side, we help consumers identify the consumption behaviours that contribute to their carbon footprint so they can make informed choices.

Behaviour change expert, Michael Daddo, Managing Partner of The Shannon Company identifies these other essential drivers of change;

“Firstly we need to sensitise businesses to the idea that more and more businesses are adopting a climate neutral business model to increase customer and staff loyalty, attract new customers and talent; as well as contribute to a better society.

Secondly, we aim to elaborate on that with research showing the vast majority of customers and talent are supporting and looking to join companies that are already or are actively pursuing carbon neutrality.

Thirdly, we use testimonials of successful business stories, how they became carbon neutral and what it has meant in terms of business success, new customers and staff loyalty and attraction.

Lastly, we want to consistently highlight the growth of businesses becoming carbon neutral, in totality and by business sector or location to make the movement as relevant as possible to everyone.”

It’s evident that collective scale is the key to success in this process of shifting norms, and what’s powerful about SMEs in Australia, is that their volume means even a small percentage of business leaders taking leadership on climate has the potential to create significant shifts in broader community sentiment.

3. SMEs are by nature, more agile and able to make change

When a large organisation looks to decarbonise its operations it faces significant barriers, largely driven by the scale and complexity of the business. As an SME, what you might lack in resources will likely be far outweighed by your lack of bureaucracy, allowing decision-makers to have a more immediate impact. 

This argument is heightened for startups looking to scale up quickly, highlighting the benefits of implementing a climate positive strategy as early as possible, enabling the company to grow with this mindset and any associated processes already built into business-as-usual.

Your impact reaches wider than you think

The below diagram demonstrates the ripple effect created when just one business, no matter its size, becomes carbon neutral or climate positive. This illustrates that the impact is far greater than simply the environmental benefits of removing CO2 from the atmosphere, or even the co-benefits of the climate projects supported when purchasing carbon offsets. A network effect comes into play, with the climate positive message reaching employees, suppliers, investors and customers alike. The impacts are exponential and in this way, support our collective efforts to shift the norms towards more sustainable business practices. 

What we could achieve together

After only 12 months since launching our business offering, trace has now welcomed over 100 SMEs to our climate positive family! Our first 100 climate positive businesses have offset a massive 8,500 tonnes of CO2 (the equivalent of about 37,000 economy flights between Sydney and Melbourne!) and we’ve planted over 41,000 trees!

By the end of 2022, we are aiming to have 1000 climate positive businesses join trace, which we estimate will allow us to offset an additional 90,000 tonnes of CO2 - the equivalent of a small petrol car driving around the world 6,360 times. We would also plant around 450,000 trees! And, 1000 SMEs only represents a tiny fraction of all 2.4 million Australian SMEs, so you don’t have to dream too big to imagine the impact we could have if even more SMEs band together to take climate action in the years to come.

This is the power of collective action in cold, hard data. And what sits behind these numbers are all the less tangible, yet equally as important, positive ripple effects that each new climate positive business creates in the communities of our climate projects as well as closer to home amongst our own networks. 

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The final piece of the puzzle

Maybe all of this is not news to you and you’re motivated and ready to take action but one thing stands in your way - you’re not the final decision-maker. For our list of the top arguments we find are most persuasive for managers, senior leadership and board directors, click here.