Small and Medium-sized Enterprises (SMEs) could play a pivotal role in the pursuit
of climate objectives. SMEs have a significant carbon footprint on aggregate, but
they can also contribute to reaching net zero through their innovations and commitment
to the use of environmentally friendly practices. This study develops a novel metric
to identify environmental engagement, also referred to as “greening”. The study harnesses
the power of machine-learning and analyses the content of over one million websites
of firms from 15 OECD countries encompassing about 10 billion words. Greening is identified
based on firms’ self-declared information about products or processes on their websites.
The resulting indicator is then evaluated considering firms’ characteristics. The
results show that: (1) About one-third of SMEs are environmentally engaged, albeit
with considerable variations across countries; (2) Greening SMEs are more productive,
pay higher wages and their sales grow faster than non-greening SMEs; (3) Solar energy
is the most cited action among greening SMEs, followed by recycling and energy efficiency,
(4) Sectors with higher greenhouse gas emission reduction over the past decade also
display higher levels of environmental engagement.