CDP released a climate disclosure framework, giving small and mid-size enterprises (SMEs) the tools to make strategic climate commitments, track and report progress against those commitments and demonstrate climate leadership. Find out why it is critical for SMEs to play an active role in the transition to a low carbon economy and what the climate disclosure framework enables.
Until now, most sustainability reports have catered to the ambitions of large, high-emitting global corporations due to customer and investor pressure for emission reduction. Although this pressure has cascaded down to the SME level, there has been a lack of clear guidelines and support, with many SMEs citing cost and complexity as barriers to action.
The CDP climate disclosure framework marks a new chapter of focus on SMEs. It is developed specifically for the needs of SMEs to stimulate measurement, management, and disclosure of the most vital climate-related indicators, equipping SMEs with the tools and resources needed to move from climate commitment to action.
The world is at a critical junction for global action. The IPCC’s Sixth Assessment report highlighted the potentially catastrophic and irreversible damage that could occur if global temperatures rise past 1.5°C. If global warming temperatures are to be limited to1.5°C there is an acute necessity to cut emissions by half in the next decade.
SMEs play an important part in limiting climate change for a couple of key reasons:
“SMEs play a major role in economies around the world; micro-enterprises alone account for 70–90% of all firms. Without them, we cannot transition to a 1.5°C future” — Sonya Bhonsle, CDP Global Head of Value Chains and Regional Director Corporations
SMEs greatly vary due to factors like the company size, experience with climate disclosure, and the nature of products and services offered. Given their heterogeneity, the new CDP framework is built on flexibility, allowing SMEs to tailor the framework to their disclosure needs and reporting capabilities.
The flexibility is achieved through a modular design, enabling SMEs to complete as many or as few sections as they want beyond the minimum core requirements. It also allows prioritisation of the most important and relevant considerations for them and their stakeholders.
The framework translates other reporting standards, such as the GHG Protocol, Task Force on Climate-Related Financial Disclosures(TCFD), and the Science Based Targets Initiative (SBTi) into an SME-centric framework. It informs SME reporting where appropriate given that most of these standards are directed towards larger organisations. The framework consists of three core modules and four additional modules.
The additional modules should be expanded and integrated into reporting structures within three years.
However, this is not an exhaustive list and other considerations such as carbon removal and broader environmental concerns like biodiversity and water security could be integrated into the framework at a later date.
SMEs play a pivotal role in tackling global climate change, provided the resources and tools are there to facilitate the transition to a low emission economy. The CDP climate disclosure framework provides SMEs with the means to understand how best to reduce emissions and report their impacts and strategies to multiple stakeholders. However, these frameworks must be backed by action. Currently, 1,800 SMEs disclose climate information to CDP. It is hoped that the release of this new framework will drive increased, industry-wide uptake.
The CDP climate disclosure framework was launched in collaboration with SME Climate Hub and created in partnership with the Exponential Roadmap Initiative and Normative.
To find out more about how Altruistiq could support your business in its sustainability transition, drop us a line at email@example.com.
Altruistiq is a climate software company providing businesses with the technology infrastructure to measure, manage and abate their sustainability impact.
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