Why small businesses are failing to measure carbon emissions

The vast majority of small and medium-sized businesses (SMBs) don’t bother measuring their carbon emissions, a major survey of business leaders worldwide by Young Presidents’ Organization (YPO) has revealed.

And this widespread failure to track energy usage could have serious implications as a raft of governments start to impose mandatory climate reporting as part of the global drive toward a net zero emissions future.

The findings of the ‘2023 Global Impact Report’ are a cause for great concern to YPO Chair Raymond Watt, who admits he’s disappointed that more progress hasn’t been made.

"There’s a great emphasis on net zero targets by 2050, but climate change poses a real and present danger, not a future one."

"I was surprised that only four percent of respondents measure their organization’s direct and indirect emissions, and only five percent had data on renewable energy consumption," he tells The CEO Magazine.

"Last year was the hottest on record, with new highs for air and sea temperatures. There’s a great emphasis on net zero targets by 2050, but climate change poses a real and present danger, not a future one. The scale of the challenge is immense."

ESG Insights

YPO is a global community of chief executives, with more than 34,000 members across over 150 countries, whose companies boast 22 million employees and an annual revenue of US$9 trillion.

Its first annual report focuses on a range of ESG factors such as carbon reporting, gender equality, ethics and diversity in boardrooms. More than 700 member companies took part, hoping the results would provide insights into what collective action should be taken.

"Our members all want to play their part, but often don’t have the right technology in place, nor access to an army of advisors," Watt acknowledges. "For many, the regulatory landscape feels increasingly crowded and confusing."

No wonder, given the legislative discrepancies between territories and shifting goalposts on exactly what needs to be reported to whom and how it should be done.

Efforts to harmonize requirements have stepped up across the United States, Canada, the European Union, Singapore, Australia and elsewhere. In addition to energy-related factors, impacts on local communities, workplace culture, gender equality and policies on modern day slavery all have to be filed annually.

Supporting Business Leaders

For Watt, the report demonstrates an urgent need for more help for SMB leaders in navigating the reporting landscape.

"YPO has committed to supporting its members in assessing their environmental impact and how best to report it. Once they understand, they can take concerted action to accelerate their transition," he explains.

"We must ensure young executives and future chief executives are equipped to take the bold action needed in coming years when the battle against climate change may be won or lost."

But equipping businesses and individuals is a lot easier for a multinational conglomerate than a small family bakery. It would need to sell a lot of cupcakes to employ the sort of sustainability officer becoming ubiquitous in the C-suites of global organizations.

"Measurement is a commercial as well as a climate imperative."

Free online tools such as the SME Climate Hub can be a useful first step in understanding the factors and terms involved, but Watt wants more government support.

"Measurement is a commercial as well as a climate imperative. SMB leaders urgently need to understand it, but perhaps a more fundamental need is to simplify the landscape itself."

Either way, he doesn’t believe the widespread inaction on measurement means there’s a lack of commitment to social and environmental issues.

"We expect our members to continue engaging with us on this journey to shape a world that’s more prosperous, equitable and sustainable," he concludes.