A new report released by Quebec Net Positive (QNP) offers a detailed roadmap that paves the way for small and medium enterprises (SMEs) to accelerate efforts to decarbonize their operations.

Manufacturing Realities: Towards a Low-Carbon Economy is the final study issuing from the SMEs in Transition initiative launched two years ago by QNP, a Montreal-based, non-profit think tank.

The report provides an X-ray examination of the relative progress made by small- and medium-sized companies in Quebec toward reducing their carbon footprints. It also offers strategic proposals intended to spur action among those enterprises unwilling to play their part in the transition to net-zero.

Some of the principal findings and recommendations relate to promoting shared learning of decarbonization strategies (communities of practice), identifying transition pathways, and overcoming managerial resistance (learned helplessness) whereby companies refuse to accept any responsibility for climate change.

Mixed results from November 'Barometer'

The report comes on the heels of the mixed results contained in QNP's annual Quebec Business Transition Barometer. This Leger survey, released in November, analyzed responses from 806 Quebec business leaders.

The Barometer revealed the number of Quebec companies (large firms as well as SMEs) actively undertaking decarbonization measures in 2024 remained disappointingly unchanged at 17 per cent. However, these engaged companies reported they had implemented a significantly higher level of climate actions compared to the previous year (a Transition Index of 42 vs 34.7).

Overall, Quebec businesses were found to have implemented one-third (33 per cent) of "necessary climate actions" to reduce emissions while the majority of SMEs with 10 to 249 employees reported a moderately higher implementation rate of 39.3 per cent.

"The businesses demonstrating the highest level of climate action are large companies which are implementing 50 per cent of available emission reduction measures," Anne-Josée Laquerre, executive director and co-founder of QNP, said in an interview with Sustainable Biz Canada.

"Large companies are undertaking more climate action because they have boards of directors which are actively engaged in sustainability. And in the case of SMEs with boards, they are taking climate action at the same 50 per cent level as big firms.

"We believe SMEs can do more. By promoting communities of practice - sharing knowledge and collaborating within the sustainable ecosystem - we can push SMEs to boost climate actions from the 33 per cent to the 50 per cent level." 

More worrisome was the finding that the proportion of "unconcerned" businesses has decreased only marginally in 2024 to 22 per cent as compared to 24 per cent in 2023. These companies believe that reducing carbon emissions is "not urgent" and remain indifferent toward climate action.

Key recommendations from the report

The December QNP report issues seven principal recommendations:

• Train to act: Enhance sustainability skills among SME leaders, managers and employees, as well as key influencers in the business ecosystem.
• Promote collaborative learning: Offer diverse learning formats to build core competencies needed for a just, inclusive and sustainable systemic transition.
• Simplify foresight approaches: Make this strategic tool more accessible through practical, SME-focused content and approaches.
• Inspire with transition stories: Share testimonies from engaged and visionary SMEs to demonstrate the transition is possible and showcase successful examples.
• Improve access to information and resources (climate and greenhouse gas data).
• Integrate change management: Incorporate change management strategies and psychological insights to address human factors in SME mobilization.
• Increase energy productivity, material productivity and circularity: Focus on optimizing resource use to lower costs, improve competitiveness and reduce greenhouse gas emissions.

Overcoming resistance

Many SMEs lack motivation to decarbonize except under external pressure.

"These companies may well understand the risks of climate change but won't take action unless a big client somewhere along the supply chain has stipulations regarding sustainability targets or carbon emissions," Laquerre said. 

"Many of these SMEs simply don't believe their actions will make a difference. We need to bring them into alignment with the majority of Quebec companies that understand the benefits of climate action which also tend to make them more efficient."

Considerable progress is required to spread knowledge and share expertise to overcome the "learned helplessness" syndrome: the futility many Quebec SME managers experience when faced with the challenge of carrying out decarbonization measures; or those otherwise skeptical of the value of such efforts on a macro level.

According to Laquerre, SMEs are gradually recognizing that implementing climate actions is not only profitable but also puts them in position to harness an evolving range of business opportunities arising out of a circular, sustainable economy.

"SMEs need to be encouraged to understand that they have a key role to play as part of a collective effort towards achieving net-zero. Every step along the transition path is important.

"We need to further develop a sustainable ecosystem where companies and their employees look at this pathway as something that is positive, innovative and should be on everybody's mind. We all need to occupy this space."