i卡會員

Small and medium enterprises (SMEs) are the economic foundation of Taiwan. According to the “2023 White Paper on Small and Medium Enterprises in Taiwan” published by the Small and Medium Enterprise and Startup Administration of the Ministry of Economic Affairs, there are a total of 1.633 million SMEs in Taiwan, representing approximately 98.90% of businesses, a new record high. Among them, 145,000 SMEs are in the manufacturing industry, accounting for 96.37% of the total manufacturing businesses in Taiwan. In the service industry, 80.24% of companies are SMEs, equating to over 1.31 million businesses.

Over 80% of carbon emissions of many end-use products, such as electronic products, automobiles, food, fashion, and fast-moving consumer goods, come from the supply chains of SMEs according to a survey conducted by the World Economic Forum (WEF). The Organization for Economic Cooperation and Development (OECD) emphasizes in their special study on SME and Entrepreneurship Outlook that there can be "No net zero without SMEs", meaning that achieving net-zero emissions is not possible without the involvement of SMEs. This underscores the crucial role played by numerous SMEs in the drive for net zero. Taiwan's SMEs hold a significant position in the international supply chain and need to actively engage in low-carbon transformation.

In addition, the European Union's Carbon Border Adjustment Mechanism (CBAM) has been in trial operation since October 1, 2023. It requires the disclosure of embedded GHG emissions data for the import of six listed product categories to the European Union, including iron and steel, and aluminum. Many global brands have set net-zero emission targets. To maintain their competitiveness in the supply chain, companies must address the issue of low-carbon transformation. The less carbon emitted, the greater their competitiveness.

Three dilemmas faced by SMEs in carbon reduction

However, SMEs encounter three challenges when it comes to carbon reduction, namely "lack of information," "insufficient capacity," and "no clear directions”. They may not understand the essence of the issues, have no access to relevant information, and cannot analyze the risks without an understanding of carbon tariffs. Some companies have started to take inventory of their carbon emissions, but when they realized they needed professional support, they did not know where to find the talents and only had a limited understanding of the various strategies and solutions. For example, manufacturers may hesitate to phase out equipment due to factors such as insufficient funds or machine availability. Or if old machines have been recently replaced by newer and more energy-efficient models, immediate updates are not an option. Some companies would like to digitalize for carbon reduction, but digitalization may come with risks to workflows and workforce allocation because many of the employees are seniors. In the service industry, efforts to reduce carbon emissions in restaurants, such as by turning down the air conditioning in the seating areas may raise concerns about customer discomfort and the future loss of business. All these practical concerns may affect SMEs' willingness to undergo a low-carbon transformation.

This article suggests that SMEs can drive low-carbon transformation through three steps: clarification of their needs and setting goals; organization of teams and execution of tasks; and leveraging of government resources. The top priority is to clarify the company’s needs and set goals, in order to identify effective solutions. This is followed by the organization of teams and the execution of tasks according to the company's goals and capabilities to maximize work efficiency. Assisting SMEs make good use of government support and resources is one of the key factors in facilitating low-carbon transformation. Whether it's education and training, consultation and diagnosis, carbon reduction guidance, or even financial support, the government has planned multiple supporting measures in information, consultation, guidance, and funding to help SMEs to initiate or accelerate low-carbon transformations. Businesses are encouraged to take full advantage of these measures.

Three steps and five models for net zero - to benefit oneself and others

In addition to the three steps previously mentioned, there are five models for the low-carbon transformation of SMEs: these are equipment upgrade, energy optimization, digital transformation, circular economy, and manufacturing process upgrade. These models can be mixed and matched, depending on the extent of carbon reduction efforts and the actual goals and resources of the companies.

As the first step in initiating low-carbon transformation, most companies will implement measures such as the phasing-in of energy-efficient equipment, the optimization of manufacturing processes, or the adoption of circular economy practices. Some companies have completed the phasing-out of high-energy-consuming equipment and are still willing to collaborate with energy-efficiency experts to explore additional energy-saving potential. Some SMEs have introduced digital tools to manage their own carbon emissions, increased the efficiency of carbon footprint assessments in the supply chain, and even created new business opportunities by developing digital systems to provide value-added services to customers.

According to a report by the market research and survey company IDC, the ESG market size was approximately $38.9 billion in 2020, and it is expected to grow to over $158 billion by 2025. A McKinsey survey in 2022, also forecasted that the net zero market size may exceed $12 trillion by 2030. Business opportunities in this field are extensive and include carbon management, development of innovative energy sources and waste management.