Three ways small businesses can prepare for the shift to a low carbon economy

As the world turns its attention to the 26th UN Climate Change Conference of the Parties (also known as COP26), we’re encouraging small businesses to consider what they can do in their business to take positive action to combat climate change.

At Xero, as we grow and support more customers, we remain mindful of our impact on the environment. Growing in a sustainable way is a part of who we are and it aligns with our purpose to make life better for people in small business, their advisors and communities around the world. While we are proud of our progress, we still have more to do and we want to share our learnings with the small business community so we can bring them on the journey too. 

Here are three practical ways small businesses can get ready for the shift towards a low carbon economy:

1. Assess climate risks and opportunities for your business

Every business owner should be weighing up climate-related risks and opportunities, and prioritising areas to focus their efforts on. Look for resources provided by your local government that can help you identify risks and opportunities for your business’ location and industry. 

The Good Impact Framework developed by Cogo, offers a simple way for New Zealand businesses to identify ways to tackle sustainability. This is a good starting point for taking tangible action towards sustainability. To narrow down your areas of focus, look at consumer insights to help you prioritise by learning what issues matter to customers in your industry. Explore what actions other businesses in your industry have taken on to address specific issues and think about how you can incorporate these into your business.

At Xero, we’re committed to evolving every function of our business to consider short, medium and long term risks and opportunities around climate change. We are aligning to the Taskforce on Climate-related Financial Disclosure (TCFD) risk assessment and disclosure framework to manage these, and have been a carbon neutral company since 2019.

2. Join the science-based targets initiative (SBTi) global movement

Science-based targets provide businesses with a clear pathway to reduce greenhouse gas emissions and future-proof business growth. The targets have been developed in line with the United Nations Paris Climate Agreement goals. 

While we’ve already started reducing our emissions at Xero, a key intended step for FY22 is to formalise our carbon emissions reductions plans. We’re developing emissions reduction targets (aligned to the SBTi) by modelling our emissions through to 2030, and continuing to implement emissions reduction strategies across the business.

You don’t have to be a big business to consider setting emission reductions targets. There are sector-specific pathways and those who join benefit from expert advice to help build a resilient, sustainable business.

3. Use technology and resources available to help you 

Most governments offer useful resources for businesses to manage their environmental impact. In some cases, businesses who can prove their sustainability efforts can access grants and other benefits. Here are some great government resources for some of our key customer markets:

• Climate Change Adaptation Toolbox (New Zealand)
• SME Environmental Hub (Australia)
• SME Climate Hub (United Kingdom)
• EPA Hub (United States)
• Grant programs for green businesses (Canada)
• Grant programs for green businesses (South Africa)
• SME support articles (Singapore)

There are also apps available to help small businesses identify opportunities to reduce their impact on the environment. Two examples are Carbon Analytics and Spherics, which leverage Xero’s data to help small businesses start calculating and understanding their carbon footprint. We are actively looking into how we can make this process even easier, cheaper and faster through technology.

Start small and choose a couple of actions that you can commit to doing well. To find out more about how your small business can operate more sustainably, check out the following Xero resources:

• How to make small business environmentally sustainable 
• Three steps to creating a sustainably-minded business
• How to reduce your plastic footprint

While we are proud of our progress in sustainability so far, we recognise there is more to do. We’re committed to working with and supporting others to minimise our impact on the environment and ensure a smooth transition to a low carbon economy. 

Find out more about our approach to environmental sustainability, including our carbon neutrality program, Net Zero @ Xero.