The SME Climate Commitment – All You Need To Know

The SME Climate Commitment is an initiative set up the UK government which aims to encourage SME businesses to commit to taking action immediately in offsetting their carbon emissions. The SME Climate Commitment is one of the three pillars of the SME Climate Hub and provides SMEs, no matter their sector or geography, with the opportunity to make an internationally recognised climate commitment which is aligned with the latest climate science.

It gives us great pleasure to announce that Nordens have signed up to the SME Climate Commitment, where we will be disclosing our annual progress in achieving net zero. SMEs that join the SME Climate Commitment will be recognised by the United Nations Race to Zero campaign, joining a wide range of governments, businesses, cities, regions, and universities around the world that are committed to achieving net zero carbon emissions.

The SME Climate Commitment has been designed specifically for small and medium-sized enterprises to align their operations with the latest climate science. We break down the benefits to joining the SME Climate Commitment and exactly what the scheme entails.

What Is The SME Climate Commitment? 

In 2015, the landmark Paris Agreement was signed by 196 countries with the overarching objective of ‘holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change’.

In 2018, the Intergovernmental Panel on Climate Change, the leading scientific body for climate change, issued a major report called the IPCC Special Report on Global Warming of 1.5°C, in which over 6000 climate scientists stated that to avoid the worst effects of climate change, we must limit global warming to 1.5°C. Current estimates suggest that we have already reached global warming of approximately 1°C and if we continue on the current trajectory, we will reach global warming of 1.5°C between 2030 and 2052.

As long as emissions are above zero, the planet will continue to heat and that is why it is also important to reach a state where greenhouse gases entering the atmosphere are balanced by permanent removal from the atmosphere (net zero) as quickly as possible and by no later than 2050.

By signing up to the SME Climate Commitment initiative, you will be agreeing for your company to commit to these three actions:

• Halve greenhouse gas emissions before 2030
• Achieve net zero emissions before 2050
• Disclose progress on a yearly basis

SME business leaders that make the SME Climate Commitment agree to start taking action immediately towards these three core aims. These are intended to be the minimum level of commitment and action, however it is of course encouraged for businesses to go ever further.

Who Can Sign Up To The SME Climate Commitment & What Are The Rewards?

The SME Climate Commitment is specifically designed for small to medium sized enterprises. This is defined as a company with up to 500 employees. Companies with more than 500 employees cannot participate but are encouraged to make a commitment and take action using one of the other recognised Race to Zero business tracks:

• Business Ambition for 1.5°C
• The Climate Pledge
• The Exponential Roadmap Initiative (The 1.5°C Business Playbook)
• B Corp Climate Collective

The SME Climate Commitment should be signed by an SME CEO or another person in the organisation who has the authority to represent the company. By sharing the company details on the SME Climate Hub and clicking ‘Commit’, the company will be expected to do its utmost to deliver on the SME Climate Commitment. Once committed, it is encouraged to start immediate action within a 3 to 6 month period. This includes:

• Measure and estimate current greenhouse gas emissions
• Set short and medium term targets for emission reductions in line with the commitment
• Develop a plan to achieve emission reduction targets
• Start to take concrete action to reduce key emission sources and move toward the net zero target date selected
• Encourage other SMEs to do the same

To align with the SME Climate Commitment, businesses will need to cut its absolute greenhouse gas emissions by at least 50% before 2030, from a base year not more than 2 years back in time. Businesses will be asked to disclose their progress to the SME Climate Commitment annually, with the first progress report needing to be completed within 18 months.

As a result of signing up to the SME Climate Commitment, the name and logo of the business will be featured on the SME Climate Hub and will be officially recognised by the United Nations Race to Zero campaign.

As well as this, it will also enable businesses to download the SME Climate Hub logo to include on storefront, website or other marketing materials. All businesses will also receive access to a wide range of tools and resources to aid their climate commitment under the SME Climate Hub. This will help effectively plan, strategise and co-ordinate how to reach the targets set out.

It will also send out a hugely positive message to clients, investors, and supply chain leaders, investors, shareholders, consumers and employees, informing them of your pledge to become more sustainable as a climate-responsible business.

How Do I Sign Up To The SME Climate Commitment?

You can start your application to enter the SME Climate Commitment at the dedicated government portal page here. For more information on the UK Business Climate Hub simply click here.

We hope this has outlined to you exactly what the SME Climate Commitment is and whether your business qualifies for it. If you require any further information on any government schemes, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.