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Smaller firms responsible for half of UK business-driven greenhouse gas emissions report reveals

Written by Latifa Yedroudj on Thursday, 28 October 2021. Posted in Disruption, Analysis

The survey shows the impacts smaller businesses could make towards reducing their carbon footprint

Smaller firms responsible for half of UK business-driven greenhouse gas emissions report reveals

The survey shows the impacts smaller businesses could make towards reducing their carbon footprint

Greenhouse gas emissions strengthen the greenhouse effect, leading to climate change with devastating impacts on the planet. Most carbon dioxide emissions come from burning fossil fuels, for cars, trucks, ships, trains and planes. Now, the latest research shows that smaller businesses account for half of UK business-driven emissions – the same proportion as larger businesses, according to research by the British Business Bank. 

The British Business Bank has revealed that smaller businesses account for almost 30% of all current UK greenhouse gas emissions, and around 50% of total emissions from UK businesses. This shows the impact UK smaller businesses make, and how with their collective efforts, could reduce carbon footprint and reduce greenhouse emissions. Research shows that over three in four businesses have not implemented comprehensive decarbonisation strategies, capabilities and actions, to reduce emissions. And only 3% of smaller businesses said they have measured their carbon footprint in the past five years and made set a target to reduce emissions. In addition, more than half (56%) of businesses say they have taken no action in improving their knowledge on greener practices.  

However, 94% of businesses said they have taken at least one action to reduce their emissions - though they appeared to be low-effort initiatives, such as installing a smart meter. Just over half (51%) of businesses, said that it "made financial sense" to take action, saying there was a need to align net-zero and financial objectives for businesses in the transition. However, the data reveals around half (52%) of smaller UK businesses fall within the ‘Carbon Complacent’ or ‘Carbon Exposed’ personas established by the Bank, based on business characteristics, emissions intensity, actions and attitudes. Businesses falling under these personas are reactive or simply disengaged in their attitudes in cutting emissions and having ‘low carbon transition maturity’. 

Businesses seem to know what they need to do to reduce their carbon footprint. More than half (57%) of smaller businesses have heard a lot, or a fair amount, about the government’s commitment to reach net-zero emissions by 2050, and the implications of climate change for their businesses (56%), establishing a strong base for further transition.  

Almost half of smaller businesses said reducing emissions was a priority – but the majority said they are not ready to make take that step. 47% of smaller businesses said reducing carbon emissions or environmental impacts is a high or very high priority over the next two years. On the contrary, 53% said they are not yet ready to prioritise decarbonisation. This split in attitudes demonstrates the need to raise awareness, balance the knowledge gap and change attitudes when it comes to reducing greenhouse emissions. 

Businesses have said barriers were preventing them from taking action towards greener practices. More than a third of smaller businesses cited costs as a barrier for reducing carbon emissions, particularly upfront capital costs (21%), followed by feasibility (32%), such as lack of control due to tenancy agreements or lack of appropriate technology. Over one in ten (12%) said that lack of information was preventing them from taking action. So far, 11% of the smaller business population - equating to around 700,000 businesses in the UK - have accessed external finance, in the form of loans or equity, to support net-zero actions. Looking forward, 22% of the UK smaller business population (equivalent to around 1.3 million businesses – say they are prepared to access external finance to support net-zero actions in the next five years. The report analysed the data from a survey of 1,200 smaller businesses and an analysis of public data sources. 

“Smaller businesses will generally have lower individual carbon footprints than their larger counterparts, but by broadening their vision and committing to action they can collectively produce a significant overall impact,” Catherine Lewis La Torre, CEO, British Business Bank said. Action to mitigate the impacts of climate change is at tipping point, and it is crucial for smaller business owners to feel empowered, informed and supported in making the relevant steps to decarbonising their business if the UK is going to meet its wider net zero objectives by 2050. More than half of smaller businesses say they’re not ready to prioritise decarbonisation, so clearly more needs to be done. 

“The Bank continues to strive to bridge the knowledge gap and work with its partners to improve smaller businesses’ access to the right finance to help them transition to net zero. We hope this report encourages business owners to review their business model, consider where changes can be made and to make the necessary investments to secure a sustainable future for their businesses.” 

“Small businesses need to be front and centre in our national effort to reduce emissions, which is why we’re working closely with the government’s British Business Bank to bake our top priority of reducing carbon emissions into the business finance pie,” Small Business Minister Paul Scully said. “We launched our ground-breaking Net Zero Strategy this week and in the run-up to COP26 in Glasgow next month, we are pulling every lever we can to get every part of the UK’s business community on board with the vital need to reduce emissions and build back greener.”

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

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