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No net zero without the help of SMEs

Michael King
Michael King • 4 min read
No net zero without the help of SMEs
Asean SMEs have a combined carbon footprint that exceeds the total annual national emissions of countries like Cambodia. Photo: Pexels
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Southeast Asia (SEA), a region brimming with dynamism and entrepreneurial spirit, is home to over 71 million Small and Medium Enterprises (SMEs) – accounting for 97% of all businesses in the region. From driving innovation and employment to fostering community development, SMEs form the backbone of the economy, underscoring their critical role in shaping SEA’s future.

Yet, the reality that looms over our planet today is stark: SEA’s SMEs have a combined carbon footprint that exceeds the total annual national emissions of countries like Cambodia. With SEA on the road to carbon neutrality and net-zero emissions by 2050, this spells an urgent need for businesses to bolster their sustainability initiatives, or risk irreversible damage to the environment, and by extension, fall behind in today’s highly competitive market.

Fighting climate change from the bottom up

With increasing pressures on SMEs to reduce their carbon emissions, many are recognising the benefits of adopting sustainable practices. The businesses are also embracing the digital economy and as data stored in the cloud continues to grow, amplified by the expanding role of AI, the demand for cloud storage has surged to new heights. Nonetheless, while cloud adoption is less carbon-intensive than on-premise solutions, data centres still significantly contribute to global carbon emissions.

Where price, performance, and scalability were once the top considerations for leveraging the cloud, sustainability has now emerged as the primary priority. In fact, Wasabi’s Cloud Storage Index report revealed that sustainability remained the top priority among considerations when choosing a cloud storage provider in Singapore. 

SMEs, being nimble entities deeply entrenched in local economies, possess a unique capacity to drive meaningful change from the grassroots level upward. Their ability to innovate, influence supply chains, and engage with local communities makes them essential contributors to global sustainability efforts.

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SMEs that invest in reducing their emissions can experience numerous short and long-term business benefits. These include improved efficiency, reduced operating costs, and compliance with carbon legislation, among many other advantages. The question then arises: without the same resources that larger businesses have, what hurdles do SMEs face in reducing their carbon footprint?

Climate costs cause concern for SMEs

Despite increased attention to sustainability among businesses in the region, a substantial portion of SMEs continue to operate in an experimental phase, implementing only minimal changes across their operations. In fact, 60% of SEA’s SMEs identified high initial costs – associated with investments in talent, training, research and technology – as the primary challenges in adopting sustainable practices. The reality is that as SMEs – who typically operate on leaner budgets – continue adopting emerging technologies, they will need to manage their limited financial resources effectively and support sustainable growth to remain competitive.

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Moreover, unlike larger enterprises equipped with robust sustainability reporting frameworks and dedicated environmental departments, SMEs often grapple with a lack of visibility into their carbon emissions. This further complicates their efforts to enact meaningful sustainability measures. The lack of insight into their environmental impact arises from various factors, including limited access to comprehensive data collection tools and resources tailored to their specific needs. Consequently, SMEs are hindered not only in establishing realistic emissions reduction targets but also in tracking progress and pinpointing areas for enhancement.

Two key considerations in the path to sustainability for SMEs

With that, cloud solutions must help SMEs navigate these challenges and strike a balance, allowing them to fully leverage the benefits of the cloud while advancing their sustainability efforts. Some key considerations for SMEs in choosing cloud providers should then include:

  • Count what counts: While numerous cloud providers are introducing solutions to guarantee the energy efficiency of their offerings, focusing solely on that is inadequate. It is equally critical to complement these efforts by establishing reliable measurements of carbon footprints, such as cloud carbon calculators.

    By quantifying their carbon impact, SMEs can better understand their environmental footprint, take ownership, and devise strategies to manage, reduce, or offset emissions over time. This approach enables them to track their progress and measure the effectiveness of their efforts, thereby demonstrating their commitment to sustainability. 
  • Choose the right partner: SMEs aiming to advance their adoption of emerging technologies will need to rein in their budgets. Prioritising the selection of cloud providers, especially those that do not charge additional fees for data egress or API operations, can enable SMEs to effectively control their budgets and avoid unexpected costs from fluctuating storage fees.

In the quest for a sustainable cloud future tailored to SMEs, collaboration emerges as the linchpin – the collective accountability of every participant in the ecosystem — be it businesses, cloud providers, or regulatory bodies. Only through a unified effort can SEA fulfil its aspirations of achieving net-zero emissions and propelling economic growth.

Michael King is the vice president and general manager for Asia Pacific and Japan at Wasabi Technologies

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