A Model for Estimating Greenhouse Gas Emissions of Small and Medium Enterprises

Sergio Scandizzo*, Massimo Mariani**, Francesco D’Ercole**, Domenico Frascati**, Alessandra Caragnano**, Antonia Brandonisio**

* Former Head of Model Validation at the European Investment Bank, University of Luxembourg

** Università LUM – Department of Finance, Management and Technology

The present research project is the result of the collaboration between LUM Giuseppe Degennaro University and the European Investment Bank. This research project addresses a significant gap in current efforts to mitigate climate change by focusing on the often–overlooked emissions from SMEs. By providing a tailored tool for estimating SMEs’ GHG emissions, this project contributes to and fills a critical gap towards achieving carbon reduction targets.

This paper presents a comprehensive methodology for assessing greenhouse gas (GHG) emissions of small and medium-sized enterprises (SMEs), focusing on the integration of an environmentally extended multi-regional input-output (EEMRIO) model. Recognizing the significant contribution of SMEs to global emissions and their challenges in adopting standardized GHG accounting due to resource constraints, the study proposes a scalable and accessible tool tailored for an initial assessment of their environmental footprints. The model draws on EXIOBASE data, capturing both direct and indirect emissions across 163 industries in 44 countries. It estimates emissions by linking revenues and expenditures to country- and sector-specific CO₂ intensities, adjusted for inflation. Furthermore, through a case study on an exemplified Italian textile SME, the paper demonstrates the tool’s application and produces a detailed estimate of combustion-based CO₂ emissions across Scopes 1, 2, and upstream 3 categories. This work offers SMEs a practical starting point for emissions measurement and reporting, supporting the requirement for enhanced transparency requested by financial institutions and policymakers, ultimately encouraging more robust sustainability practices.

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