- cirececo2
- Sep 8
- 3 min read
According to the United Nations, the opportunity to avert a climate crisis is narrowing rapidly. What humanity does or fails to do within the next ten years will leave an imprint on our world for generations to come[1]. In this context, supply chains are the backbone of the global economy, connecting producers, businesses, and consumers. As sustainability becomes central to business strategy, supply chains are under growing scrutiny to address environmental and social challenges at scale. While large corporations often dominate the conversation, small and medium enterprises (SMEs) play an equally critical role. By embedding sustainability into their operations, SMEs can act as catalysts for innovation, resilience, and inclusive growth. This shift aligns with global ESG standards and supports the collective pursuit of net-zero targets.
Why Sustainable Supply Chains Matter
Supply chains account for a significant share of global greenhouse gas emissions, with just eight sectors including food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services, and freight. They are responsible for more than 50% global emissions. Much of this impact is indirectly concentrated within the operations of a relatively small number of companies[2]. Beyond emissions, supply chains also shape labor conditions, resource consumption, and community development worldwide. As governments, investors, and consumers demand greater accountability, businesses are rethinking procurement, resource use, and partnerships.
“Addressing supply chains is essential to advancing overall environmental, social, and governance (ESG) initiatives, as they account for over 90% of an organization’s greenhouse gas emissions and between 50% to 70% of operating costs[3].”
Research by the World Economic Forum estimates that decarbonizing supply chains in these eight sectors could cut global emissions by up to 40% through circularity, efficiency and renewable power[4]. This transformation requires deep collaboration between large corporations and their networks of SMEs. In practice, this is already happening: Unilever’s “Climate & Nature Fund” works with suppliers and SMEs across its value chain to scale regenerative agriculture, sustainable packaging, and low-carbon logistics, showing how targeted partnerships can drive systemic change[5].
Global initiatives such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and emerging regulations in North America and Asia underscore the urgency for companies to manage risks and opportunities beyond their direct operations. Sustainable supply chains not only mitigate reputational and regulatory risks but also drive efficiency, innovation, and long-term competitiveness.
The Role of SMEs in Sustainable Supply Chains
Small and Medium Enterprises (SMEs) are a cornerstone of most economies, particularly in developing countries. Representing about 90% of businesses and over 50% of employment worldwide, they are key drivers of job creation, economic growth, and national income. Formal SMEs contribute up to 40% of GDP in emerging economies[6]. Their scale and reach make them indispensable to the sustainability agenda. Yet, SMEs often face challenges including limited financial capacity, lack of technical expertise, and exposure to market volatility that can hinder their ability to fully engage in ESG transitions.
Pathways for SMEs to Drive Sustainability
Achieving sustainable supply chains requires collaboration, innovation, and alignment with ESG priorities. SMEs can contribute by:
Green Procurement and Partnerships:
Aligning with green procurement standards enhances market access and ensures long-term contracts with larger corporations. For example, SMEs providing sustainable packaging or renewable energy-based inputs can directly lower the emissions of entire value chains.
Innovation and Circular Practices:
SMEs often have the flexibility to pilot innovative solutions, from recycling and remanufacturing to developing low-carbon alternatives. In the fashion and textiles sector, SMEs experimenting with circular designs are reshaping global supply chains by extending product life cycles.
Digital Tools and Transparency:
Emerging technologies like blockchain and IoT allow SMEs to track emissions, resource use, and compliance more efficiently. While adoption can be resource-intensive, shared digital platforms and collaborations help SMEs overcome barriers and strengthen transparency.
Skills Development and Capacity Building:
Training and capacity building are crucial for SMEs to understand ESG requirements, implement sustainable practices, and report progress effectively. Partnerships with governments, industry associations, and larger corporations can bridge this gap.
Under Vision 2030, Saudi Arabia has launched numerous programs aim to promote efficient energy use, environmental preservation, and supply chain resilience, making the Kingdom an attractive destination for ESG-focused investments. By leveraging these programs, SMEs can enhance supply chain sustainability, reduce carbon emissions, and contribute meaningfully to the Kingdom’s broader ESG and economic goals.
Comments