Activities will include
- Carbon accounting workshops: Teach students the tools and methods to calculate emissions.
- Partnership Programs: Pair students with local SMEs for hands-on experiential learning.
- Strategy Sessions: Conduct brainstorming and strategy-building exercises to reduce emissions.
- Progress Monitoring: Regular check-ins with partnered SMEs to track reduction efforts.
- Best Practices Development: Develop best practices and create benchmarks for unique sectors by focusing on SMEs from the same industry.
The SME Climate Lab aims to contribute to a sustainable future and a thriving economy by integrating climate action into curriculum, programming, and industry.
Benefits
Both students and SMEs will acquire hands-on experience in emissions calculation and learn to navigate sustainability reporting challenges. There is a potential for the project to support ongoing emission management and demonstrate SMEs' climate commitments. By participating, SMEs can expect the following outcomes:
- Baseline Carbon Footprint Report: A detailed analysis of your current Scope 1 and Scope 2 emissions, with some Scope 3 analysis, providing a foundation for tracking progress.
- Emission Reduction Plan: Recommendations for strategies to reduce carbon emissions based on the identified primary sources.
- ESG Reporting Guidance: Assistance with completing ESG questionnaires, essential for transparency with large customers and stakeholders.
In the future, SMEs will benefit from benchmarking analysis to understand their competitive stance on emissions and from continued education for sustainable emissions management within their teams.
How to Get Involved?
Students
Enrollment in COMM486E: Climate-focused ESG Reporting and Analysis, which begins in January 2024, is a prerequisite for participation in the SME Climate Lab. This course provides a thorough understanding of climate reporting for businesses of varying sizes. It includes a hands-on project where students collaborate with an SME to calculate its carbon footprint.
Contact course Instructor, Caren Lombard: caren.lombard@sauder.ubc.ca
SMEs
The SME Climate Lab presents a unique collaborative opportunity for SMEs interested in ESG reporting or seeking B-Corp certification.
Eligible businesses should meet the following criteria:
This partnership is especially beneficial for SMEs aiming to establish their baseline carbon footprint, focusing on Scope 1 and Scope 2 emissions. Such companies may have already faced or anticipate receiving ESG-related inquiries from large clients, including entities like UBC or the provincial government. The SME Climate Lab is a forward-thinking program designed to bolster SMEs' capabilities by providing the necessary support to assess carbon footprints, identify priority reduction strategies, and adeptly respond to questionnaires from significant customers, among other needs.
- Staffing under 100 employees.
- Based in British Columbia, with some exceptions considered.
- Generating annual revenue from $1 million to $20 million.
- Operating primarily from one manufacturing facility, where applicable.
To express your interests and join our September 2024 cohort, please complete the registration form here:
Contact Executive Director, Centre for Climate and Business Solutions, Kookai Chaimahawong: kookai.c@sauder.ubc.ca
Resources
Getting Started: Carbon Accounting 101
Climate Fit Training - Measuring Emissions Workshop
Understanding the Importance of Carbon Accounting
Carbon accounting is vital for tracking and reducing greenhouse gas emissions, which are a primary cause of global warming and climate change. Like financial accounting, carbon accounting quantifies the impact of an organization’s business activities – though instead of financial impact, it tracks climate impact.
Carbon Footprint:
A carbon footprint quantifies the total greenhouse gas emissions, including carbon dioxide (CO2), methane (CH4), and others, that result directly and indirectly from individual or organizational activities. These emissions are typically categorized into three scopes, defined as Scope 1, Scope 2, and Scope 3, to better understand and manage their environmental impact. Each scope covers different sources of emissions, providing a comprehensive overview of an entity's contribution to climate change. This categorization is especially pertinent for small and medium-sized enterprises (SMEs) aiming to assess and reduce their carbon footprints.
- Scope 1 emissions are direct emissions from owned or controlled sources. For an SME, this might include emissions from manufacturing processes, company vehicles, or heating and cooling in owned buildings. An example would be a small bakery emitting CO2 through the natural gas used in its ovens.
- Scope 2 emissions are indirect emissions from the generation of purchased energy. This typically includes electricity, heating, and cooling that an SME buys to power its operations. For instance, if a small tech startup uses electricity from the grid to power its servers, the emissions generated in producing that electricity are considered Scope 2 for the startup.
- Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, both upstream and downstream. These are often the hardest to calculate and can be the largest share of a carbon footprint. Examples for an SME might include the emissions produced from the production of materials purchased by a small manufacturer, employee commuting, or the use of sold products. An advertising agency, for example, might consider the emissions from freelancers who work remotely as part of its Scope 3 emissions.
Understanding these scopes helps SMEs identify where their most significant environmental impacts lie and where to focus reduction efforts. By analyzing each scope, SMEs can implement more effective strategies to reduce their carbon footprint, such as investing in energy efficiency, sourcing renewable energy, or engaging with suppliers on sustainability.
Steps to Begin Carbon Accounting
1. Understanding the Basics of Carbon Footprint
- Begin by educating yourself and your team on what a carbon footprint is, the importance of carbon accounting, and the global standards for greenhouse gas emissions (e.g., The Greenhouse Gas Protocol).
2. Conduct an Initial Assessment:
- Inventory your current emissions without making any changes. This involves collecting data on energy usage, company travel, supply chain operations, and any direct emissions from your operations. Tools and software designed for carbon accounting can simplify this process.
3. Categorize Emissions into Scopes:
- Break down your emissions into Scope 1, Scope 2, and Scope 3, as previously described. This categorization helps in understanding the source of emissions and how to address them.
4. Set a Baseline:
- Choose a year or period as your baseline for carbon emissions. This will serve as the reference point for assessing progress towards your carbon reduction goals.
5. Identify Reduction Opportunities:
- Analyze your emissions data to identify areas where you can reduce emissions. This might include switching to renewable energy sources, improving energy efficiency, or changing supplier or material choices to more sustainable options.
6. Set Clear, Achievable Goals:
- Based on your assessment, set realistic but ambitious carbon reduction targets. Consider aligning your goals with international agreements like the Paris Agreement.
7. Implement Reduction Strategies:
- Develop a plan to achieve your goals, which might involve changes in operations, investment in new technologies, or engaging with your supply chain on sustainability.
8. Monitor and Report:
- Regularly monitor your emissions and compare them against your goals. Reporting your progress (internally and externally) is crucial for transparency and can help in engaging stakeholders.
9. Verify and Adjust:
- Consider third-party verification to ensure accuracy in your reporting. Be prepared to adjust your strategies based on the effectiveness of your current actions and evolving best practices.
Regulatory Requirements & Standards
Reporting Components |
Examples | Focus | Key Component |
---|---|---|---|
Framework | CDP (Carbon Disclosure Project) |
CDP, formerly known as the Carbon Disclosure Project, is a global non-profit organization that operates a platform for companies and cities to disclose their environmental impacts, particularly related to climate change, water security, and deforestation. The primary focus of CDP is to encourage corporate transparency and accountability regarding environmental risks and opportunities, particularly those related to carbon emissions and climate change mitigation. | CDP provides a comprehensive disclosure platform where organizations can report their environmental data and performance metrics related to climate change, water security, and deforestation. Through this platform, companies disclose information on their greenhouse gas emissions, climate-related risks and opportunities, water management practices, and forest-related impacts. |
Standards | GRI (Global Reporting Initiative) |
GRI is one of the most widely used frameworks for sustainability reporting globally. It offers comprehensive guidelines for reporting on economic, environmental, and social aspects of sustainability, aiming to promote transparency and accountability. | GRI Standards consist of Reporting Principles, Disclosures on Management Approach, and Performance Indicators. The Reporting Principles provide overarching guidance on materiality, stakeholder inclusiveness, sustainability context, and completeness. Disclosures on Management Approach require companies to explain how they manage significant impacts and risks, while Performance Indicators enable measurement and reporting of sustainability performance. |
Sustainability Accounting Standards Board (SASB) | SASB provides industry-specific sustainability accounting standards, focusing on financially material sustainability topics that are likely to impact the financial performance of companies within each industry. | SASB standards are organized into five categories: Industry Descriptions, Disclosure Topics, Metrics, Technical Protocols, Activity Metrics. Each standard provides guidance on the disclosure of material environmental, social, and governance (ESG) issues specific to the industry, helping companies report relevant information to investors. | |
Task Force on Climate Related Disclosures (TCFD) | TCFD was established by the Financial Stability Board (FSB) to develop recommendations for voluntary climate-related financial disclosures. Its primary focus is on providing information to investors, lenders, insurers, and other stakeholders about organizations' exposure to climate-related risks and opportunities. | TCFD's recommendations are structured around four thematic areas: Governance, Strategy, Risk Management, and Metrics and Targets. These areas guide organizations in disclosing climate-related information that is relevant, consistent, comparable, and decision-useful for stakeholders. |
|
International Financial Reporting Standards (IFRS) S1 and S2 | IFRS S1 and S2 are part of the International Financial Reporting Standards (IFRS) framework and focus on incorporating climate-related disclosures into financial reporting. | IFRS S1 addresses general climate-related disclosure requirements within financial reporting, emphasizing the importance of providing relevant, reliable, and comparable information to investors. IFRS S2 specifically deals with the measurement and disclosure of specific climate-related risks and impacts, such as physical risks, transition risks, and financial impacts associated with climate change. |
How it Fits into ESG Reporting
Direct Impact Measurement
Carbon accounting offers a quantifiable measure of an organization’s direct impact on the environment, specifically in terms of greenhouse gas (GHG) emissions. It provides data that can be used to track performance against environmental sustainability goals, such as reducing carbon footprint or achieving net-zero emissions.
Transparency and Accountability
Carbon accounting underpins transparent reporting and accountability in ESG disclosures, allowing stakeholders to assess a company's governance practices in managing environmental impact. It also helps in aligning with frameworks and standards like the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD).
Stakeholder Engagement
Transparent reporting of carbon emissions demonstrates a company's commitment to addressing climate change, which can enhance its reputation among consumers, employees, and communities. It shows responsiveness to the social implications of environmental issues, such as public health and environmental justice.
Why it matters
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Guiding Climate Change Mitigation
Just as a lighthouse guides ships through treacherous waters, carbon accounting illuminates the path to mitigating climate change. By quantifying emissions, organizations can identify the largest sources of their carbon footprint and prioritize actions to reduce them, effectively navigating through the murky waters of environmental impact.
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Access to Funding & Markets
An increasing number of financial institutions and investors are focusing on green finance and sustainable investments. For SMEs, thorough carbon accounting and demonstrating a commitment to sustainability can improve access to these funding opportunities.
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Significance of SMEs in Canada
SMEs form a crucial part of Canada’s workforce, with 1.2 million small businesses constituting 97.9% of all employer businesses in the country. In British Columbia, SMEs are especially prominent, with 7.7 million individuals employed accounting for 67.7% of the private labor force.
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Increasing effects of climate change on SME’s and need to mitigate
2022 BMO Climate Institute commissioned survey of SME's' showed SMEs in Canada and the U.S. are concerned about the impacts of climate change, but few have action plans. Businesses expect physical impacts of climate to disrupt operations over the next five years with severe and unpredictable weather patterns topping the list while one third are already feeling the impacts. SMEs say they could use help to understand the impact of climate change on their businesses. -
SME Engagement in Carbon Reduction
While most SMEs have begun to reduce their carbon footprint, they often don’t set targets or monitor carbon usage, mainly due to resource constraints and a perceived lack of relevance. However, they are willing to adopt further measures with proper support. -
Need for tailored support
It is acknowledged that SMEs require a different approach than large companies for the adoption and implementation of low carbon initiatives. This involves education and support that is attuned to the unique challenges and contexts of SMEs. -
Climate-change skills gap
35% of global sustainability leaders struggle with hiring and upskilling executives in climate-change skills, posing barrier to effective climate action strategies. -
Addressing sustainability skill gaps
Many sustainability leaders are internally promoted without initial expertise in sustainability, highlighting the need for upskilling to meet sustainability goals.
Challenges
Resource Constrained for SMEs
Many SMEs operate with limited resources, which might hinder their ability to engage with and implement the recommendations from the program fully.
Data Collection Challenges
There is a risk of difficulties in effectively gathering comprehensive and accurate data from SMEs and the ability to verify it.
Implementation Challenges
Accurately measuring and verifying the impact on emission reduction and sustainable practices can be complex and resource-intensive.
Measurement and Verification
Accurately measuring and verifying the impact on emission reduction and sustainable practices can be complex and resource-intensive.
Keeping Pace with Evolving Regulations
Climate regulations and sustainability standards are continuously evolve. Staying up-to-date and compliant can be challenging for the program.
We’ve launched the SME Climate Clinic to help fill in this gap, providing tailored support, resources, and expertise to assist SMEs in overcoming these challenges and achieving meaningful progress in their sustainability journey.