The NDCs 3.0 are the new national climate goals each country will set in 2025 to ensure it maintains the emissions commitments made in the Paris agreement. The NDC 3.0 guidelines will act as a practical way for countries to include SMEs in their national climate plans and emissions reduction goals. Crucially, the guidelines will make it easier for small businesses to access climate finance, an integral way for businesses to speed up their climate transition. 

Finance is a key theme this year in COP29, with representatives from all nations coming together in the Azerbaijani capital to devise actionable solutions to finance the green transition. 

Carbon credits, tradeable on an international “carbon market” under UN oversight, are the central point of contention at this year’s COP. These newly standardised carbon credits can be used by countries towards their Nationally Determined Contributions (NDC), their commitment to reduce emissions and comply with the Paris agreement. It is hoped that a harmonised system of carbon credits would curb global emissions while still enabling economic growth; however, countries must agree on a common standard to measure and trade carbon credits, and practical ways to implement them in their national climate goals – which is where the NDC 3.0 guidelines come in.

Supporting small businesses to adapt to new climate standards is crucial for the NDC 3.0’s success: according to recent estimates from the European Commission, SMEs represent over 50% of all employment globally and are responsible for 64% of global business emissions. But they are the ones most often lagging behind in the transition to climate efficiency and new reporting methods, as they often lack the expertise and manpower to implement mechanisms like the carbon credits scheme, or are scared off by the complexity and bureaucracy involved. More importantly, they lack the capital to invest in environmentally friendly innovation, such as technology to reduce emissions, and struggle to get financing specifically for this. 

While negotiations on major issues are progressing slowly, plans for projects to support small and medium enterprises (SMEs) have been flourishing. A declaration to support small businesses to become more climate-friendly, the Joint Declaration on Baku Climate Coalition for SMEs Green Transition, was signed on Wednesday November 13 by the ITC and Brazil and Azerbaijan’s small businesses agencies. The Joint Declaration is intended to support small businesses start the shift to a sustainable business model and pave the way for a focus on SMEs in next year’s COP30, to be held in Brazil. 

As world leaders discuss the future of the climate transition, NDC 3.0 guidelines are crucial to bring the agreements reached to life. By tying together the fates of grand climate goals and small business initiatives, the guidelines make it possible for a more equitable and sustainable path to Net Zero.