Do Small and Medium Enterprises have a small and medium environmental impact?

Small and medium-sized enterprises (SMEs) play an essential role in the production of goods and services.

In the 36 countries of the Organisation for Economic Co-operation and Development (OECD), of which Canada and the United States are members, they make up more than 95% of all businesses and provide about 2/3 of all jobs [1].

These companies produce almost everything we buy and use, hence their essential role in our society. Nevertheless, this role is accompanied by a certain social and environmental responsibility. They produce what we consume, but also what we throw away, playing a colossal role in the problem of climate change [2]. Although the environmental and social footprint of a single SME may be relatively small, its significant volume translates into a notable impact when aggregated. In Europe alone, SMEs are responsible for 60 to 70% of industrial pollution [3]. 

In Quebec, in 2019, 14% of total energy consumption was attributable to the commercial and institutional sectors. The main energy sources used are electricity (60%) and natural gas (31%) [4]. Waste management, transportation, goods production and day-to-day operations are other areas of business that are also sources of GHG emissions and other pollutants. A survey conducted by CPA Canada and FEI Canada on how Canadian companies manage their GHGs found that 63% of companies do not track their GHG emissions and 67% of companies have not set a voluntary GHG reduction target and do not plan to do so [5]. 

Yet their large volume can serve as an important catalyst for the transition to a green economy. A green economy minimizes the environmental impacts of activities while improving societal well-being through job creation and economic growth. Although economic growth has led to the degradation of natural resources and ecosystems [1], it is possible to consolidate development and sustainability if science is used as a basis and more caring practices are incorporated.   

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Modular sectors; compressed emissions

Thus, if all SMEs in the OECD were to rethink the management of their supply chains, energy use, waste, transportation and production practices, then the aggregate impact of these changes would be significantly positive for the climate. They are central to the achievement of environmental sustainability and this transition in business practices and values provides an opportunity for companies to offer goods and services with an attractive environmental value [6].

In Quebec, energy consumption in the residential, commercial and institutional sectors is responsible for the emission of 8.4 megatonnes of CO2 [8]. Nevertheless, this sector presents a relevant and interesting opportunity for GHG reduction. More than 70% of the GHG emissions associated with this sector are compressible if fossil fuels are abandoned and energy efficiency designs are incorporated [7].

The improvement of waste management in companies is at the heart of the problems of waste of resources, pollution and GHG emissions [9]. By implementing sorting and reuse measures for these materials, there is a reduction in the quantity that is currently landfilled. These practices lead to a reduction in methane emissions and an increase in reused and recycled materials. 

The weight of transportation in Quebec’s GHG emissions is quite high: 36.5 megatonnes of CO2. Eighty-three percent of the energy used in the transportation sector is attributable to the transportation of goods and personal vehicles [4]. Thus, better management of these in companies or the modification of the source of supply of materials to reduce the distance between raw materials and the final product or the electrification of these, if possible, are relevant solutions in the reduction of GHG emissions. These potential areas of action are concrete examples of actions that may seem futile when applied by a single company, but which are relevant when applied collectively.  

Transition: costly and complex? 

Traditionally, there is a stigma of the financial burden associated with transitioning from traditional business practices to more environmentally friendly practices. There is a tendency to believe that implementing these practices is very costly and complex. However, there are interesting financial opportunities such as some financial relief and the availability of government grants. We note that some companies would like to change their practices, but are held back by the lack of expertise and knowledge in the field.

Most companies that implement these voluntary measures are motivated by internal values. They are aware of their impact and the current issues. For these companies, the measures that are implemented also represent new market opportunities and the discovery of modelable areas that have the potential to reduce the costs of daily operations [1].

Better-planned waste management reduces the costs of waste treatment and the costs of raw material procurement [10]. Environmentally conscious practices do not systematically lead to increased costs. If a company works with more efficient materials than the ones originally used, then the amount of supply required is reduced and the associated costs are also reduced. There are several external benefits such as competitive marketing, reduced pollution and GHGs, and a positive public image.

A survey of small and medium-sized businesses in Ohio that have implemented environmentally responsible adaptive measures through behavioural changes (waste, transportation and energy) concluded that they have seen significant benefits in reduced operational costs, improved corporate reputation, increased sales and community well-being [1].

At Will, we help companies aware of their impact on climate change to implement relevant and feasible measures by offering our internationally recognized expertise and knowledge. By calculating the initial carbon footprint of companies, we can establish which areas of activity require the most attention and adaptation measures.

We then trade these environmental impact reduction results on voluntary carbon markets in the form of carbon credits. The companies we work with receive the money from the sale of these credits. In other words, when companies work with us, they receive financial benefits for their efforts to reduce their climate impact.

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The scope of these behavioural changes may seem small, but Will has managed to reduce Quebec’s GHG emissions by more than 8.1 million tons between 2010 and 2021 by working to improve energy use and waste management among SMEs. It is in the community that climate action makes sense!