The Big Business Case for Carbon Action in 2024
Carlos Chambers
CEO, cofounder
July 17, 2024
The history of humans dealing with climate change is littered with negotiation this, consultation that, analyse there… if there’s a pattern it’s one of talk trumping action.
For the world’s 400m action-oriented SMEs this trend doesn’t resonate. While governments accelerate decarbonisation and take corporates with them by force of regulation, voluntary SME participation is still early. In the advanced UK market 15% of SMEs measure their carbon footprint. In Australia and New Zealand it’s under 5%.
Lack of motivation and difficulty of doing so are barriers. In this free market phase relying on intrinsic motivations and sophisticated corporate tools and methods is like asking a 3 year old not to eat the ice cream that’s in front of them, and please build an annual financial budget spreadsheet at the same time. Or like asking a SME business owner to weigh their rubbish instead of talk to their customers.
But inaction increasingly looks like it could cost SMEs in the coming months and years. The mega shift towards Net Zero by governments, economies and consumers is already creating winners and losers. This is before we get to the environmental costs.
Corporate buyers are pushing sustainability reporting onto their suppliers, consumer awareness of climate change and business’ sustainability credentials is growing, and wider supply chain shifts are aligning capital and investment to low carbon technologies and industries, as well as businesses who can demonstrate their environmental performance.
Big trends affect SMEs. A parallel is the shift from retail stores to online e-commerce. In 2024, 2.7 billion consumers will shop online and 21% of retail sales will be transacted online. For SMEs not selling online, they are missing one in every five dollars. 18 years ago when Shopify one of the key SME web-store platforms it was hard to gauge how big the change would be, now it feels obvious.
One day the majority, maybe close to 100% of commerce will be transacted online. The same is true for climate, the majority of businesses will need to play their part in the climate effort to defend their social licence. By definition, all businesses play the game of capitalism. And capitalism’s language is incentives and motivations extrinsic to SMEs like who customers spend their money with and how much they buy. Plus making things realistically achievable. In other words, easy.
The business case for sustainability is becoming clear to business leaders. The World Economic Forum’s Centre for Nature and Climate cites Capgemini Research Institute Report that in 2023 63% of executives surveyed agree that “the business case for sustainability is clear”. In 2024 over half plan to increase investment in sustainability, up from a third in 2022.
SMEs tend to do things if they are forced to - pay your taxes or else. The other reason is because it will create value for their business - often defined as reduced cost, increased revenue, happy clients - and it is straight forward enough not to be too much hassle or pain for them.
Reducing operational costs like travel, electricity and reduced waste. Repurposing operational and marketing investment into sustainability plays enhancing their product or service offering.
Sustainability can be a competitive differentiator in the market. This is especially true in competitive sectors or undifferentiated ones like professional services.
Marketing edge
For example Real Estate where we’ve seen firms like Lowe & Co invest in sustainability and clever marketing campaigns to differentiate themselves from every other agency
New business
Attract customers that your business might not have otherwise appealed to. For example, Microsoft the largest company in the world is now requiring all of it’s Australian suppliers to complete sustainability plans and report on their carbon footprint and moves to reduce or mitigate it.
Supply chain changes
Set business up for supply chain changes - banks are setting up dedicated lending products for sustainability investment and requiring sustainability information from corporates with the same trends extending to SMEs.
As a brand being able to authentically tell your story to your customers is important. Hero brands like Tesla and Patagonia have taught us this. This space is not just limited to the big girls and boys - as a SME there’s opportunity to tell your own unique and authentic story and stand out against bigger brands.
For SMEs the main objections I hear are outlined below. I’m calling these perceived objections or myths because they are perception rather than reality. They fall into two buckets.
"As a smallish company it’s really hard to work out what your carbon footprint or impact on the environment is… I don’t have the expertise and I’m not going to consider all the inputs because I don’t know what they all are. If I was going to pay an organisation to assess our impact it would cost a lot of money”. – Steve O’Rourke, Director Ocular, Creative and Video Agency
But new technology and ways exist which can overcome these objections and SME leaders are reaping the benefits of them.
People2People are a leading white collar recruitment firm with 130 fte, and ~100m turnover. Supporting other SMEs as well as corporate and government clients saw them looking for a credible solution which didn’t get in there way of them running their business. For Mark Smith the Group CEO the business case was how easy it was to use the businesses accounting data to calculate their carbon footprint in minutes and that most corporate tenders are asking for sustainability reporting from suppliers. As one example, people2people have been successfully appointed as a preferred supplier to the South Australia Government panel.
An engineering and project management firm the story is about people - team and clients. As well as the leadership being parents the business case anchors on demonstrating responsibility and lasting impact for future generations. “The technology allowed us to thoroughly assess our annual accounts and calculate the carbon footprint of RECOR’s business operations… and determine the precise number of trees necessary to mitigate our emissions.”
ArcTree shared similar motivations to both of these. Ease of use was key for them - Alan Chambers the founder completed the measurement process by connecting up the company’s Xero after he’d ordered an Uber and was waiting for it the pick up en route to a client function!
This year’s SME Climate Hub Survey echoes these stories. Of 288 SME respondents 62% who took climate action reported enhanced business reputation from doing so. 53% reported increased differentiation against competitors. 40% achieved branding benefits. 37% met and exceeded customer expectations and retained business. Finally, 30% won new customers as a result.
It’s easy, affordable, and commercially impactful to do something good. If you’re running a SME business the benefits to taking action probably wash their own face. Most other businesses and the environment don’t care what your motivations are. Do it for your business and do it for your bottom line. Feel confident and proud knowing that you’re doing the right thing for the planet, it's people and your business.
The history of humans dealing with climate change is littered with negotiation this, consultation that, analyse there… if there’s a pattern it’s one of talk trumping action.
For the world’s 400m action-oriented SMEs this trend doesn’t resonate. While governments accelerate decarbonisation and take corporates with them by force of regulation, voluntary SME participation is still early. In the advanced UK market 15% of SMEs measure their carbon footprint. In Australia and New Zealand it’s under 5%.
Lack of motivation and difficulty of doing so are barriers. In this free market phase relying on intrinsic motivations and sophisticated corporate tools and methods is like asking a 3 year old not to eat the ice cream that’s in front of them, and please build an annual financial budget spreadsheet at the same time. Or like asking a SME business owner to weigh their rubbish instead of talk to their customers.
But inaction increasingly looks like it could cost SMEs in the coming months and years. The mega shift towards Net Zero by governments, economies and consumers is already creating winners and losers. This is before we get to the environmental costs.
Corporate buyers are pushing sustainability reporting onto their suppliers, consumer awareness of climate change and business’ sustainability credentials is growing, and wider supply chain shifts are aligning capital and investment to low carbon technologies and industries, as well as businesses who can demonstrate their environmental performance.
Big trends affect SMEs. A parallel is the shift from retail stores to online e-commerce. In 2024, 2.7 billion consumers will shop online and 21% of retail sales will be transacted online. For SMEs not selling online, they are missing one in every five dollars. 18 years ago when Shopify one of the key SME web-store platforms it was hard to gauge how big the change would be, now it feels obvious.
One day the majority, maybe close to 100% of commerce will be transacted online. The same is true for climate, the majority of businesses will need to play their part in the climate effort to defend their social licence. By definition, all businesses play the game of capitalism. And capitalism’s language is incentives and motivations extrinsic to SMEs like who customers spend their money with and how much they buy. Plus making things realistically achievable. In other words, easy.
The business case for sustainability is becoming clear to business leaders. The World Economic Forum’s Centre for Nature and Climate cites Capgemini Research Institute Report that in 2023 63% of executives surveyed agree that “the business case for sustainability is clear”. In 2024 over half plan to increase investment in sustainability, up from a third in 2022.
SMEs tend to do things if they are forced to - pay your taxes or else. The other reason is because it will create value for their business - often defined as reduced cost, increased revenue, happy clients - and it is straight forward enough not to be too much hassle or pain for them.
Reducing operational costs like travel, electricity and reduced waste. Repurposing operational and marketing investment into sustainability plays enhancing their product or service offering.
Sustainability can be a competitive differentiator in the market. This is especially true in competitive sectors or undifferentiated ones like professional services.
Marketing edge
For example Real Estate where we’ve seen firms like Lowe & Co invest in sustainability and clever marketing campaigns to differentiate themselves from every other agency
New business
Attract customers that your business might not have otherwise appealed to. For example, Microsoft the largest company in the world is now requiring all of it’s Australian suppliers to complete sustainability plans and report on their carbon footprint and moves to reduce or mitigate it.
Supply chain changes
Set business up for supply chain changes - banks are setting up dedicated lending products for sustainability investment and requiring sustainability information from corporates with the same trends extending to SMEs.
As a brand being able to authentically tell your story to your customers is important. Hero brands like Tesla and Patagonia have taught us this. This space is not just limited to the big girls and boys - as a SME there’s opportunity to tell your own unique and authentic story and stand out against bigger brands.
For SMEs the main objections I hear are outlined below. I’m calling these perceived objections or myths because they are perception rather than reality. They fall into two buckets.
"As a smallish company it’s really hard to work out what your carbon footprint or impact on the environment is… I don’t have the expertise and I’m not going to consider all the inputs because I don’t know what they all are. If I was going to pay an organisation to assess our impact it would cost a lot of money”. – Steve O’Rourke, Director Ocular, Creative and Video Agency
But new technology and ways exist which can overcome these objections and SME leaders are reaping the benefits of them.
People2People are a leading white collar recruitment firm with 130 fte, and ~100m turnover. Supporting other SMEs as well as corporate and government clients saw them looking for a credible solution which didn’t get in there way of them running their business. For Mark Smith the Group CEO the business case was how easy it was to use the businesses accounting data to calculate their carbon footprint in minutes and that most corporate tenders are asking for sustainability reporting from suppliers. As one example, people2people have been successfully appointed as a preferred supplier to the South Australia Government panel.
An engineering and project management firm the story is about people - team and clients. As well as the leadership being parents the business case anchors on demonstrating responsibility and lasting impact for future generations. “The technology allowed us to thoroughly assess our annual accounts and calculate the carbon footprint of RECOR’s business operations… and determine the precise number of trees necessary to mitigate our emissions.”
ArcTree shared similar motivations to both of these. Ease of use was key for them - Alan Chambers the founder completed the measurement process by connecting up the company’s Xero after he’d ordered an Uber and was waiting for it the pick up en route to a client function!
This year’s SME Climate Hub Survey echoes these stories. Of 288 SME respondents 62% who took climate action reported enhanced business reputation from doing so. 53% reported increased differentiation against competitors. 40% achieved branding benefits. 37% met and exceeded customer expectations and retained business. Finally, 30% won new customers as a result.
It’s easy, affordable, and commercially impactful to do something good. If you’re running a SME business the benefits to taking action probably wash their own face. Most other businesses and the environment don’t care what your motivations are. Do it for your business and do it for your bottom line. Feel confident and proud knowing that you’re doing the right thing for the planet, it's people and your business.
Details TBD
Interested in joining us for the next round of Planting Action Days? Register your interest.
Details TBD
The first planting action day in Australia is coming soon! Stay tuned for more updates.
September 13, 2024
Hawke's Bay
The first regional planting action day in New Zealand.
July 7, 2024
Wellington
Look back at the planting day. 378 native seedlings were planted.
Carlos Chambers brings 12+ years of entrepreneurial experience across climate, fintech, and b2b software. He founded and successfully grew Common Ledger a fintech and data business. Working with small businesses and their accounting data gave him deep insights into the domain. He combines this with his a commercial law, and climate advocacy background giving him the ideal foundation of experience, skills and passion to build CarbonInvoice.
Coming soon
Coming soon
Coming soon
Measure and act effortlessly in 3 minutes
