PARIS - In OECD countries, SMEs (small and medium enterprises) account for approximately 99% of all firms, 60% of jobs and over 50% of value added on average. Through their collective weight, they are crucial to achieving inclusiveness, sustainability and RBC objectives, yet SMEs trail behind large enterprises in both RBC practices and many key areas of engagement.
SMEs collectively account for at least 50% of GHG emissions of the business sector, but surveys indicate that most are still in the early stages of their journey to net zero, with very limited action taken to reduce the carbon footprint of their operations.
According to one survey, only 10% of SMEs currently measure their GHG emissions, and 22% do not fully understand the term “net zero”. Moreover, about one third have yet to seek advice or information to help them develop a net-zero roadmap or improve their environmental performance.
SMEs cite lack of access to finance as one of their most important constraints to green investment. And finance is likely to present an even larger challenge for SMEs going forward, as financial institutions seek to comply with mandatory environmental reporting requirements.
SMEs also face greater challenges than larger firms in screening the regulatory environment and dealing with RBC norms – prompting discussions in environmental and human rights due-diligence legislation about whether SMEs should be subject to the same requirements as larger companies.
Enabling Responsible Business Conduct
Responsible Business Conduct (RBC) sets an expectation that all businesses should contribute to sustainable development, while preventing and addressing adverse impacts from their activities.
As the largest buyers of goods, services and public works, governments account for about 13% of GDP in OECD countries. They can therefore play a valuable role in promoting RBC, while safeguarding public interest and ensuring the accountability of public spending.
Beyond value for money, public procurement has evolved to include wider environmental, economic and social considerations, making it a strategic tool for achieving policy objectives such as the SDGs and RBC.
However, 2020 analysis has shown incomplete and uneven uptake of RBC objectives in public procurement, as central purchasing bodies have not yet systematically incorporated risk-based supply chain due diligence in their frameworks and practices.
The 27 countries surveyed all use enhanced public procurement frameworks to promote at least one of the RBC objectives covered, whether through regulation or strategy. But few address them all: while all countries have a framework supporting environmental objectives, only 41% include gender considerations, and only 48% include minority issues.
