Per this Reuters article, titled “ESG Watch: ‘Writing is on the wall’ for U.S. companies with SEC’s tough new rules on reporting climate risk”, the new SEC rules will have significant impact on U.S. companies.

In effect, for public companies with revenues of more than $75 million, they will not only have to report on their Scope 1 and Scope 2 emissions, but their Scope 3 emissions also.

Why should a SME (small to mid-sized enterprise) care?  Or, taking it further, why should a privately-held SME care?

  • If you are bidding the work of, or providing products/services directly…or via supply chain channel…to that +$75 million company, they are going to require you to be certified sustainable and have a carbon reduction program.

If you have not yet been impacted by this, it is because only 15% of public companies are reporting on Scope 3 and even fewer are asking their entire vendor pool to be certified sustainable and report their carbon emissions.

That will all change with the new SEC rules.

So, the lemons or lemonade question for SMEs is simply –

  • Do nothing and see if your clients start moving their business away from you. Then, if you are forced into it, become certified sustainable, and try to recapture some of the business lost; or
  • Use this as a way to differentiate. Become certified sustainable, promote it to prospects and clients, and take market share from your peers that delay.

Prior to the SEC rule changes, studies show that 7 out of 10 consumers (B2B and B2C) are willing to break their current loyalty and move their business if they find a certified sustainable company offering the same product value.  This has helped certified sustainable companies grow 75% – 20x faster than their non-certified peers.  With the SEC rule change, that 70% will go up and certified sustainable companies will outgrow their non-certified peers by even more.

Few of us like new rules and regulations.  But when they come, some of us see the opportunity to turn those lemons into lemonade.

Here is an article on supply chain sustainability; speaking to both large organizations and the smaller vendors who serve them.

Here is a PPP on what your organization and your supply chain vendors should look for in a sustainability program.

And proving that it can be done, here are three small organizations, all linked via a supply chain, and all certified sustainable.