The Role of Small Businesses and Companies in Climate Fight

When we think about the companies responsible for carbon emissions, we tend to focus on the Chevrons and ExxonMobils of the world. But virtually every company has a carbon footprint. And each can help solve our global problem.

“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.

While small to mid-sized companies make up roughly 90% of businesses worldwide, most global emissions can be tracked to a small number of the world’s largest companies. However, no small business is an island. Everything is connected. The beefy corporations with large value chains use smaller firms 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.

Fisher notes that a small company’s Scope 1 emissions (from their direct operations, such as the gas used in vehicles) might be part of a larger corporation’s Scope 3 emissions (from indirect activity, including purchasing raw materials), so the sustainability wins from a small business can snowball to the larger value chain. (These global scope standards come from Greenhouse Gas Protocol; Scope 2 refers to the energy purchased by a company.)

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.

Knowing Impact, Setting Targets

It can be tough for a business to know where to begin. How big is its footprint? What should it set as a goal? Tools like the U.S. Environmental Protection Agency’s Center for Corporate Climate Leadership can help a business develop targets appropriate for a company’s industry and size—their self-assessment tools are a good place to start. Additionally, the United Nations SME Climate Hub provides a target that virtually any small business can adopt: to halve emissions by 2030 and achieve net-zero by 2050.

But if quantifying the impact still feels too daunting the actual quantification might not be essential. “Even in the absence of doing a full deep measurement, they know there are actions they can take, such as sourcing renewable energy, that might make a difference,” says Chris Steuer, senior director of climate planning at ICF, a global consulting and technology services provider. In other words, something is better than nothing.

The goal is for a company to consider every action it has direct control over—Scope 1 emissions—and search for more sustainable solutions. As an example, HVAC contractors, electricians, and plumbers with large fleets should think about transitioning to electrical vehicles. Fisher says that on average, switching a light duty truck from gasoline to electric will save about 6,000 pounds of CO2 emissions annually. Trimming waste should be a priority as that lowers energy consumption both for the business and across the value chain. Every pound of waste that’s recycled instead of landfilled saves about three pounds of CO2 emissions, according to Fisher.

For example, Gloria Ware, the woman behind the startup Get The Bag, a company focused on promoting the success of Black women entrepreneurs, has been on a “zero waste journey” and trimmed the materials, packaging, and frequency of her mailings. Teplitz, of Green Business Network, concedes that most businesses won’t be able to hit zero-waste, but “even if you can’t get there, what does it mean to be on that journey?” In other words, don’t let the perfect be the enemy of the good—every bit of progress helps.

A company should also think about the building in which it operates. Building operations account for 39% of all global emissions, according to the World Green Building Council (other estimates peg it closer to 50%), which is why switching to renewable energy like solar panels, installing dimmable windows that automatically darken when the sun is brighter, or using smart building software that throttles down electricity when it’s not needed are all critical steps a company can take to reduce its Scope 2 emissions.

These options are not always available for a small shop, but Teplitz says even renters can nudge change. “Have you spoken with your landlord?” she asks. Or have you shared your environmental concerns with the building’s other tenants, and pushed for collective action? “You’re a key stakeholder,” says Teplitz, “and you have some influence that you can use.”

Even if a company has the world’s most carbon-friendly process, says Fisher, if your raw materials have emitted tons of carbon, “then you’ve still got a pretty big problem on your hands.” Small companies should analyze every link of their supply chain, which helps reduce Scope 3 emissions. What are the raw materials made from? How far are they traveling? If a company uses cotton, is that cotton coming from a sustainable source? One way to check for this is to see if the supplier has received a sustainability certification from their industry, such as the Global Organic Textile Standard. Sourcing locally whenever possible will help, as Teplitz notes that transportation accounts for 14% of all global emissions.

Impacting Policy

While it’s true that, historically, many companies have lobbied against climate change efforts, it’s also true that small and mid-size businesses have the power to impact eco-friendly policy. “It’s important for policymakers to hear members of the business community embrace a transition to a clean energy economy,” Teplitz says. Business leaders are simply seen differently than politicians or environmental activists—they’re sometimes more trusted.

The Green Business Network, for example, was part of a coalition of 1,000 small and mid-size companies that penned a June 2022 letter to President Joe Biden and Senate Majority Leader Schumer urging for action on climate change. Given the stature that business leaders have, says Teplitz, “we can’t underestimate how important it is to hear from these economic voices.”

Additionally, many small or medium-size enterprises are affiliated with a trade organization; these associations can be key to collective action since they help inform policy, says Patten. (This can be especially important if, historically, the trade organization used to oppose climate change action.) Trade organizations can follow the World Resources Institute’s “AAA Framework for Climate Policy Leadership: Advocate (for climate change policy), Align (the trade organization’s values with the WRI’s goal of net-zero emissions by 2050), and Allocate (advocacy spending to make it happen).

Many businesses that take steps with eco-friendliness in mind might want to share their story. Bethany Patten, senior associate director of MIT Sloan School of Management’s Sustainability Initiative, recommends sharing your commitment to sustainability across all communication platforms—packaging, pamphlets, websites, social media—as this helps spur action within a community, and also creates opportunities for like-minded businesses to work together. For example, if a local manufacturing company shares that they want to reduce their carbon footprint, that opens the door for local solar developers to engage them.

Perhaps one of the biggest considerations a company can make is where it banks. When The Green Business Network evaluates whether a company can be awarded a “Green Business Certification,” one of the questions they ask is, “What kind of bank do you use?” Businesses are often surprised by the question, says Teplitz, but the answer matters. The larger conventional mega-banks are “continuing to fund fossil fuel companies,” says Teplitz, which is effectively “bankrolling the climate crisis.” She encourages small companies to do their banking with greener choices like the Colorado-based Clean Energy Credit Union, which also provides loans for those seeking to address climate change.

Embracing The Upside

Working to curb the impact of climate change can bring tangible benefits to the business. “There are revenue generation opportunities by having products that resonate with consumers,” says Steuer. Younger customers are increasingly likely to appreciate—or even demand—action on climate change. Same with potential employees. As Fisher says, “Millennials and Gen Z really want to know, does my employer line up with my values? Do they believe in the need for a low-carbon future?”

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.

This article is part of a series on key topics in the climate crisis for time.com and CO2.com, a division of TIME that helps companies reduce their impact on the planet. For more information, go to co2.com

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