COP29: The Key to Improving the World Lies in the Hands of Small and Medium-Sized Enterprises

COP29 focused on global efforts to mitigate climate change, with nations negotiating the distribution of billions in funding. The topics discussed ranged widely, from the state of Brazilian agriculture to the use of satellite data in Japan. A central theme throughout various discussions was that no solution will be effective if small and medium-sized enterprises (SMEs) are left out.

In this context, solutions such as the ESG Tool are essential for SMEs. ESG Tool is a resource that helps small and medium-sized enterprises assess key sustainability topics relevant to their operations and develop their first sustainability strategy. 

COP29 (Conference of the Parties) took place in Azerbaijan, and the event’s location sparked controversy even before it opened its doors. The situation was not improved by the fact that Azerbaijan’s President Ilham Aliyev remarked in his opening speech that oil is a divine gift and should not be hidden. Meanwhile, the stadium in Baku was full of people discussing how to slow climate warming, cope with changes, and simultaneously save both nature and the economy.

One of the major upcoming changes for European companies is the obligation to measure their environmental footprint. This requirement extends beyond Europe—companies in India and Japan also need to submit sustainability reports. 

SMEs inevitably need additional funding and guidance to become more sustainable and comply with reporting requirements. Financial support must be accompanied by substantial explanatory work and assistance. Andrii Kitura, head of Ukraine’s Green Reform Bureau, emphasized that supporting SMEs in becoming more sustainable is the only viable way to rebuild Ukraine’s economy.

Engaging smaller companies is challenging because, individually, their impact is minor, and they are numerous. However, they constitute more than half of the economy globally, so focusing solely on large corporations is not an option. This applies to creating standards or using artificial intelligence (AI) solutions as well. ESG Tool provides a structured approach, enabling companies to identify important areas for improvement, set realistic goals, and monitor progress. By simplifying complex sustainability requirements, ESG Tool empowers SMEs to navigate reporting obligations more effectively and contribute meaningfully to global sustainability efforts.

A major bottleneck for the green transition is the need for energy storage, which requires increased mining of natural resources. Currently, recycling used batteries is expensive, and producing new ones is often cheaper, driving the need for more raw materials. Without energy security, there will be neither economic growth nor a transition to a green economic model.

Mining natural resources is polluting, and while large companies are ready to implement standards, the environmental impact can still be significant if small enterprises start digging in sensitive areas.

Established standards should not become additional barriers for SMEs and developing countries. As different countries and regions are at various stages of the green transition, it is crucial that implementing standards supports developing nations and smaller businesses. If SMEs are unaware of voluntary standards or cannot implement them, their existence is pointless. On the other hand, if standards are too rigid and require excessive additional work, they become obstacles to market entry, which would be a step in the wrong direction. ESG Tool simplifies the complex landscape of sustainability standards, making them accessible and actionable for small and medium-sized enterprises (SMEs) and similar appoach would be beneficial on ohter areas as well. 

At COP29, much was discussed about AI and its role in optimizing processes and reducing climate impact. AI is often seen in two extreme lights. On one hand, everyone from schoolchildren to executives knows that ChatGPT can draft emails, which helps optimize certain processes—much to the despair of teachers. On the other hand, AI is viewed as the creation of artificial neural networks, a task beyond the reach of most people. Between these extremes lies a range of solutions that can simplify and optimize various processes. Creating personal assistants that can, for example, sort waste by type, automatically manage inventory, or predict equipment failures is within reach for most companies. The key is to recognize the potential of these solutions and invest a bit of effort in learning to implement them.

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