SMEs are getting Climate Ready – How to succeed in the race to zero!

Small and medium enterprises (SMEs) play a major role in the national economic development in countries worldwide. Globally, they account for about 90% of all companies, 50% of employment and a significant impact on supply chain performances. 

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Like companies of all sizes, also SMEs are facing several challenges today. Global supply chains struggle, long term planning is difficult and upcoming climate regulations impose new guidelines on businesses. SMEs often lack resources and capabilities to deal with the fast changing circumstances.

Find in the following how the freshly launched Climate Readiness Check supports companies to move towards climate transformation.

SMEs becoming Climate Champions

SMEs play a key role in achieving the 1.5 degree target. Not only as they are key economic players, but also as they are essential to any global supply chain. This is important, as emissions from supply chains are typically 11.4 times higher than direct corporate emissions. Many large companies therefore channel their climate protection requirements along the supply chain to their suppliers, often SMEs. 

This means whole businesses have to transform the way they create value! Every company needs to become a Climate Champion, contributing to a climate compatible and future-oriented economy. Customer inquiries and international climate reporting standards are increasingly demanding effective action. Climate action is thus one of the top priorities for SMEs today.

However, many SMEs still lack the necessary resources to get into the various aspects of climate transformation and to create a concrete roadmap based on this. The question is: How can SMEs manage their climate performance, prepare for climate-related risks and position themselves as reliable leaders for decarbonization within supply chains?

Go beyond Offsetting, manage your Climate Performance

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It all starts with understanding the actual climate performance of a company. Which goes way beyond measuring CO2 and offsetting it. International disclosure guidelines, such as TCFD, ask companies to assess, manage and report their climate performance holistically. The most essential five dimensions are: governance, strategy, transparency, KPIs & metrics and decarbonisation actions. 

However, collecting the relevant data within a company can be challenging, especially for SMEs. Lacking time, tools and know-how makes it difficult to gather, streamline and manage the needed information. 

Taking first steps towards Net Zero

In the last few years, we have witnessed the need for an easy start into the climate transformation journey. Many companies, especially SMEs, approached us with the questions how to set up priorities, identify most needed actions and start improving over time. 

“For a holistic change towards a sustainable economy, tools are needed that provide SMEs with an initial orientation on how they can transform their business in a climate-compatible way. For this challenge, THE CLIMATE CHOICE has developed a practical solution. The Climate Readiness Check is an accessible tool for SMEs that enables a new push in the strategic pursuit of climate targets in SMEs.”

Phoebe Köster, Climate Policy Manager at Bundesverband Nachhaltige Wirtschaft e.V.

This is why we are happy to release today our digital and free Climate Readiness Check! Which we launch in partnership with 10 leading sustainability organizations, including B.A.U.M. e.V., Bundesverband Nachhaltige Wirtschaft e.V. (BNW), Fairantwortung e.V., Foundation Development and Climate Alliance, Jaro Institute for Sustainability and Digitalization e.V., the German Association for Small and Medium-sized Enterprises (DMB) and Zentrum für Nachhaltige Unternehmensführung (ZNU).

“Climate friendliness is increasingly becoming a competitive advantage for small and medium-sized enterprises (SMEs). On the way to climate-neutral operation, the Climate Readiness Check is a useful and low-threshold aid.”

Steffen Kawohl, Transition Manager at Deutscher Mittelstands-Bund e.V.

The Climate Readiness Check offers companies of all sizes an easy entry point into their climate transformation: through insights into their own climate maturity, suggestions for improvement and a basic access to the climate intelligence platform.

Get started with your free 5-minute Climate Readiness Check

The free Climate Readiness Check helps to overcome the initial barriers of Climate Transformation and to take the first step towards climate action. The software-driven climate self-test is manageable in 5 minutes and guides through the most relevant indicators of a company’s climate maturity.

Here is how the Climate Readiness Check empowers companies.

1. Be ahead of Climate Regulation

Completing the Climate Readiness Check will grant insights, which help companies taking first steps towards climate disclosure requirements.

2. Discover Quick Wins

Assessing the climate maturity of a company, the Climate Readiness Check proposes relevant areas for improvement and suggests immediate actions.

3. Access to Climate Platform

Successfully completing the Climate Readiness Check grants access to the Climate Intelligence Platform, where companies can discover like-minded businesses.

Climate Ready, Steady, Go!

“Climate Transformation is a goal we can only achieve together. Our free Climate Readiness Check gives first insights on a company’s individual climate maturity and allows access to the Climate Intelligence Platform, where companies can connect with other companies on their path to zero. We are excited to support businesses of all sizes to take first steps towards a low-carbon economy together.”

Lara Obst, Founder & Climate Officer at THE CLIMATE CHOICE.

You want to start your free Climate Readiness Check? Congrats, start now your climate transformation journey here!

Getting my Suppliers on Board – 5 Steps for Successful Supplier Collaboration

Achieving climate targets is a challenge that we can only meet together. This is especially true for companies, as up to 90% of their emissions typically originate in the supply chain. So now, more than anything, it’s a matter of establishing a successful supplier collaboration to achieve common climate targets.

By including suppliers in their sustainability strategy, companies can reduce emissions on a much larger scale across the value chain, rather than just internally. It also means they can make their supply chain more resilient by overcoming climate-related risks and building trusted relationships. Accordingly, more and more companies are asking themselves: How can we get all our suppliers on board and build a successful collaboration on decarbonization measures with them? 

In the following section, we present 5 key steps for building strong business partnerships and an effective supplier collaboration network.

Supplier Collaboration for Decarbonization in 5 Steps

5 Steps for Supplier Collaboration:

1. Be Transparent and Measure Data

Transparency

Which of your suppliers have already set climate targets? Which are already at an advanced stage of implementation? And which still need support? For successful supplier collaboration, a company must first answer all these questions and build a fundamental understanding of the climate maturity of its suppliers. Only then can it know where exactly its emissions come from along the supply chain.

In order to achieve this understanding, companies must first set up a consistent and scalable process for collecting comparable data on suppliers’ holistic climate maturity. To ensure comparability and quality standards, the data collected should be aligned with international climate reporting frameworks and cover the areas: governance, strategy, risk, metrics & KPIs. Data-driven tools like the Climate Performance Assessment help to obtain and manage these primary data points.

2. Ensure Supplier Commitment

Supplier Collaboration

In order to engage all suppliers in your climate transformation journey, they need to be able to trust the data collection process and understand how they benefit from the joint climate efforts. It is the company’s responsibility to communicate the importance of the collaboration and the associated opportunities for suppliers.

Working with suppliers means creating a “shared value” that will drive and motivate the supplier to align with climate targets. Establish a two-way communication flow, where expectations as well as concerns can be communicated on both sides. Make sure to explain how you will use their data, emphasizing that the participation will be the foundation for an enhanced collaboration in the future.

Important to note: Do not miss to transparently communicate where you stand yourself and only set appropriate expectations from your suppliers accordingly.

3. Set Up Climate Data Management

Supplier Climate Data Management

After collecting the required data, a decisive factor is how to process and manage it. Firstly, make sure that the data is accessible to all participating suppliers – because collaboration for decarbonization is not a one-way street, but a joint collaborative journey with mutual benefits and learnings.

Secondly, the data must be analyzed accordingly in order to uncover risk areas as well as opportunities for climate action. The insights will only support a successful climate transformation if they lead to appropriate conclusions and subsequent actions.

4. Invest in Supplier Relationships

Supplier Relationships

With this essential data-foundation, engagement and collaboration for decarbonization can begin. However, this cooperation can only work if it is built on a long-term relationship based on trust. Simply dictating guidelines does not work. Instead, there must be a mutually beneficial exchange that helps both the company and the supplier achieve their climate targets.

This is why now it’s time to: invest! To improve the supply chain’s climate performance, the company must seek to understand what suppliers need for this end. Investing in supplier relationships therefore means to collaborate on solutions that fit the interest of all stakeholders. By collaborating in forecasting, planning and capacity management, businesses can enable their key suppliers to redesign their processes and work more efficiently, which will immediately benefit the company and optimize its value chain.

5. Monitor and Optimize Continuously

Supplier Monitoring

Joint work on climate actions along the supply chain is never complete. Once you have successfully launched the supplier collaboration, it is now a matter of continuously monitoring the ongoing actions. In this way, successes can be made visible and measurable. Furthermore, this enables you to adapt processes and further develop measures if necessary.

It is helpful to use supply chain goals as a starting point and regularly measure upstream and downstream environmental impacts along the supply chain to see how effective various measures are. Also make sure that you constantly increase the goals in order to further challenge and motivate yourself and the suppliers

Challenges of Supplier Collaboration

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Nevertheless, there are several factors that make supplier collaboration a challenge for many businesses. Working together with suppliers and investing in long-term and strong partnerships requires time and effort for businesses and a fundamentally different mindset on buying processes. In addition, many companies still lack the resources and tools to collect and manage climate-related data from their suppliers. They struggle to identify the carbon hotspots along their supply chains.

In order to make supplier collaboration easier for companies, we have established the Climate Data Platform. It enables businesses to streamline and manage climate-focused data from their suppliers and to improve collaboration along the supply chain for efficient decarbonization.

You want to know more about our data-based software tool for supplier collaboration? Book a demo today and learn how to empower your suppliers to set up a structured climate management approach and to successfully support suppliers in their climate transformation efforts.

New proposals for climate-related disclosure standards by ISSB – This is what you need to know 

International investors increasingly demand information on environmental, social and governmental (ESG) matters. Transparency around sustainability and climate-related affairs gains relevance today more than ever. According to the IFRS (International Financial Reporting Standards) Foundation, the current regulations do not ensure that climate-relevant information is disclosed to a reasonable extent, but still encourages an inconsistent and selective application of voluntary standards. 

ISSB

In November 2021 at COP26 in Glasgow, the formation of the International Sustainability Standards Board (ISSB) was announced. The ISSB is an independent private-sector body that operates under the oversight of the IFRS Foundation. Its aim is to develop a globally applicable and comprehensive set of sustainability disclosure standards that works for major economies as well as for emerging markets. 

Therefore, the ISSB has proposed two new standards, in order to create further consistency, comparability and reliability across climate disclosure. The standards require companies to reveal relevant information about its significant sustainability-related risks and opportunities, necessary for investors to assess a company’s enterprise value. The G7 welcomes the establishment of the International Sustainability Standards Board and calls on all relevant stakeholders to participate in the ongoing consultation on the proposed standards. In order to create a practical, flexible and proportionate disclosure baseline, that is ultimately suitable for small- and medium-size enterprises, the G7 invites other reporting initiatives to cooperate in the process of elaborating the baseline.

Based on the work of existing investor-focused reporting initiatives – including the Climate Disclosure Standards Board, the Task Force on Climate Related Financial Disclosures (TCFD) and the World Economic Forum´s Stakeholder Capitalism Metrics – the ISSB is working towards the incorporation of the global baseline into legal requirements, with the aim to become the global standards-setter for sustainability disclosure for the financial markets. 

Both of the new standards are mainly built upon the recommendations of TCFD. While one of the proposals sets out general sustainability-related disclosure requirements, the other specifies on climate-related disclosure. Learn more about the climate-related disclosure requirements in the following.

What is the goal of the ISSB Climate-related Disclosure Standards?

The objective of „IFRS S2 Climate-related Disclosures“ is to require a company to disclose information about its exposure to significant climate-related risks and opportunities. This enables investors to access relevant information in order to make climate-compatible and sustainable financial decisions. The goal is to assess the effects of significant climate-related risks and opportunities and to understand how a company’s use of resources and activities support managing its risks as well as to evaluate the options to adapt planning, business model and operations to significant climate-related risks and opportunities. Companies are required to disclose information along the dimensions Governance, Strategy, Risk Management and Metrics & Targets. Find more detailed information on the disclosure regulations along those dimensions in the following section.

1. GOVERNANCE

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2. STRATEGY

3. RISK MANAGEMENT

4. METRICS & TARGETS

How do companies prepare for the ISSB requirements? 

Since enterprises will be required to disclose climate-related information along these four dimensions, they will face the challenge to collect climate-relevant data and analyze their climate performance. How do companies prepare for that?

Today, many companies are already using data-driven software tools, which helps them to analyze their climate performance holistically. The Climate Performance Assessment offers a fast and structured data analysis aligned with internationally recognized standards. It enables companies to holistically analyze their climate performance along the four dimensions Governance, Strategy, Metrics & Targets and Transparency. The Climate Performance Assessment is fit to meet the ISSB’s climate-related disclosure requirements as it covers the key disclosure information. 

You want to know more? Download our new Whitepaper to find more details on the upcoming ISSB standards and how to prepare for them here.

Image: Unsplash

Climate Report THE CLIMATE CHOICE – Our Climate Performance 2021

In 2021, many companies seized the opportunity of climate transformation, set climate goals and tackled them with concrete decarbonization measures. THE CLIMATE CHOICE supports companies in becoming a CLIMATE Champion, reducing emissions along the entire supply chain and thus improving their climate performance.

Transparent reporting plays a major role in this and is a crucial part of corporate responsibility. It is important to us, even as a startup, to reflect critically our own climate performance and to continuously throve to improve it.

SUSTAINABILITY GOALS AND MISSION 

The mission of THE CLIMATE CHOICE is to make climate transformation accessible to every company in a simple and straightforward way. Through our platform, we aim to enable companies to reduce around 50% of supply chain emissions by 2030. Additionally, we also focus on contributing to the 1.5 °C target through our own corporate activities. All our corporate  and business actions underline this goal in order to transform the economy and create a regenerative future.

OUR CLIMATE PERFORMANCE ALONG 5 DIMENSIONS – A STATUS QUO ANALYSIS

Along the 5 dimensions of our CLIMATE Performance Assessment – our industry-independent climate rating, we have analyzed our climate performance for 2021. A comprehensive analysis goes beyond simply measuring the carbon footprint and includes the intensity and speed with which climate targets are implemented through concrete measures and effective climate management. This enables us to track our corporate action and identify tangible strengths and potentials, which we can use in the future as a basis for climate-relevant decisions.

THE CLIMATE CHOICE 2021 – CLIMATE Performance Scoring

1. Climate Impact Model

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SDG 13

With our CLIMATE Performance Assessment along with the CLIMATE Data Platform, we support companies in analyzing their own climate performance as well as the climate impact of their suppliers. Up to 90% of a company’s emissions occur within the supply chain through purchased products or services. Hence, we help strengthen collaboration between companies and suppliers and make procurement practices climate-compatible. To promote cross-disciplinary exchange, we organize regular online CHOICE events in which experts speak on relevant topics related to supply chain decarbonization and use our CLIMATE magazine as a medium for knowledge transfer. The annual CLIMATE Transformation Summit, which has already been organized  twice since 2020, provides a stage for a wide range of debates and knowledge exchanges. We organize the Summit to strengthen cross-industry collaboration and enable knowledge sharing. In this way, our business model contributes directly to the UN Sustainable Development Goals 13 “Climate Action” and 17 “Partnerships to achieve the Goals”. Moreover, as a company we are part of B.A.U.M. e.V., a network for sustainable business, and the “Leaders for Climate Action” initiative. This helps us to keep on critically examining our own business model and to multiply the impact of our own measures through cooperative exchange.  

2. Climate Leadership

A company’s climate management is relevant in order to achieve climate targets and to act in accordance with the requirements set by government bodies and meet customer expectations . We benefit from clear responsibilities- Lara Obst as Chief Climate Officer and Theresa Wenning as Climate Performance Analyst. They are specifically responsible for identifying and managing climate-related issues. This enables us to analyze and transparently disclose climate-related opportunities and risks, particularly with regards to financial and strategic impacts.

3. Climate Performance

The Climate Impact dimension focuses on key indicators and targets for corporate climate transformation in order to analyze the impact of business activities on the environment and society. The most important key figure here is the company’s carbon footprint, i.e. the calculated CO2 emissions balance. 

Our CO2 emissions for 2021 total 4.05 metric tons. Last year, our emissions were 7.7 tons. The difference is explained partly by the use of a different software tool and partly by the use of average values last year. Our Corporate Carbon Footprint is currently still being validated by our external partner myclimate. This includes emissions from Scope 1-3, i.e. not only the emissions from our own corporate activities, but also those generated along the entire supply chain. 

4. Climate Transparency

Through regular exchange with our Advisory Board and networks (B.A.U.M. e.v. and BNW), we involve external stakeholders in setting climate-related strategies, policies and performance improvements, thus creating effective stakeholder management. In weekly demo meetings, we also ensure internal communication of climate-related topics within the team. We are currently working with the entire team to develop a Code of Conduct that covers responsible behavior with regards to human and labor rights, as well as guidelines for adherence to sustainable actions within the company.

5. Climate Actions

We use 100% carbon neutral web hosting and cloud services for our platform. In addition, our software is hosted according to the highest security standards on a 100% wind-powered data center in Germany and is DSGVO and BDSG compliant, and ISO/IEC 27001 certified. We also use GLS, a sustainable banking provider that finances sustainable businesses and supports projects such as setting up of wind turbines and organic farming, among others. By using refurbished hardware, all employees contribute to lower emissions in their daily work. In addition, together with MOBIKO, the company supports low-carbon mobility through flexible mobility budgets for employees.

Even during the fully online CLIMATE Transformation Summit in June 2021, which connected around 600 participants with climate experts and solution providers, emissions were significantly lesser as compared to an offline event. Together with our partner Fokus Zukunft GmbH & Co. KG, we calculated 4t of CO2 emissions, which included the use of  Zoom, YouTube broadcast, Slack and Gather-Town as well as the travel of two team members by train. Through a gold standard wind power project in Turkey, we offset twice the emissions created.

THE CLIMATE TRANSFORMATION IN 2022

Implementing climate goals together – that’s the motto for the coming year 2022. Our learnings from the CLIMATE Performance Assessment will help us to drive forward the climate transformation within our own company and to focus in the coming year on measures that have not been taken care of so far. We have recognized that it is not sufficient to simply offer a climate-friendly product or service. Every company must start internally, make the entire corporate DNA climate-friendly and prioritize sustainability as a core area of corporate management. The most important trend for this in the coming year will be supply chain decarbonization – climate relevant procurement decisions are what matter! Let’s make this happen in 2022 and seize the opportunities of climate transformation by working together through cross-industry cooperation to develop concrete measures and implement climate targets along the entire supply chain.

Do you also want to get a better overview of your company’s climate-related opportunities and risks? Then contact us and request information on the CLIMATE Performance Assessment.