Currently, though, while 93 per cent of large firms express an overall commitment to net zero, only 64 per cent of SMEs say the same, according to data from the British Standards Institute (BSI). And while 82 per cent of large firms state say they have a target in place, that’s only the case for 36 per cent of SMEs.
But it’s not easy. A report from the Federation of Small Businesses (FSB) earlier this year found that, while small firms are keen to become more energy-efficient, they’re being held back by the high upfront cost of green investment. Two in five small firms cited a lack of capital as a barrier to transition, while a third said the return on investment for green tech is too long.
Other issues faced by small businesses in reducing emissions include a lack of control over rented premises, limiting the actions that can be taken, and information overload – which makes it hard to know what’s trustworthy or relevant.
However, says Tina McKenzie, the FSB’s policy chair, “There are solutions to help small firms cut carbon and cut costs, from zero emission vehicles to energy efficiency, to ensuring small businesses have the know-how and the right support to future-proof their operations and bolster their margins at the same time.”
In its final report this summer, the government-backed Willow Review offered a basic five-point plan for SMEs wanting to reduce their emissions. They should switch to sustainable materials, it said, reduce travel and optimise logistics, minimise waste, act on energy efficiency and green energy, and partner with sustainable suppliers and customers.
More specifically, achieving net zero status means measuring your business’s greenhouse gas emissions across three scopes: Scope one, direct emissions you control; Scope two, indirect emissions from purchased energy; and Scope three, indirect emissions from your value chain. There’s no official accreditation, although various organisations, including NetZero Now, will provide certification.
Going greener doesn’t have to be a solo effort – financial support is out there, depending on where your business is based. The Business Energy Advice Service offers Handson help, from free energy assessments to match funded grants for upgrades like solar panels, better insulation, heat pumps and improved refrigeration.
However, it’s currently only available for businesses in the West Midlands, along with Staffordshire and Stoke-on-Trent, Warwickshire, Worcestershire and The Marches (Herefordshire, Shropshire, Telford and Wrekin). It gives grants of up to £100,000, as well as optional interest-free loans of up to £200,000.
To qualify, a firm must have fewer than 250 employees and either a turnover below £42 million or a balance sheet totalling under £36 million. It also needs to be a commercial entity that has operated from a business address for at least 12 months, and it must use a minimum of 25,000 kWh of energy each year.
However, if the government is serious about helping SMEs reduce their emissions, there are more actions it could take. It should, says the FSB, roll out the Business Energy Advice Service right across the UK.
Financial support for solar panels needs to extend to commercial properties, not just homes, and the VAT zero rate for installing energy saving materials ought to cover commercial premises as well. The FSB also argues for fairer VAT on electric vehicle charging, calling for the current split – five per cent for private homes and 20 per cent for public facilities – to be aligned at the lower rate.
With more than half of UK commercial properties currently rented, the Willow Review recommends that the government should offer incentives for landlords to upgrade small businesses’ premises to improve energy consumption.
And according to the Willow Review final report, those SMEs that do introduce sustainability measures can see big benefits – including financial ones. Two thirds reported reduced operational costs, such as energy, waste and materials, while 52 per cent said they had attracted new customers because of their sustainability commitments and 35 per cent saw improved customer loyalty.
“The incredible inventiveness and entrepreneurialism among the small business community will be a powerful tool when it comes to cutting carbon, growing the green economy, and hitting the country’s net zero targets, says Tina McKenzie, the FSB’s policy chair.
“The sustainable economy has absolutely enormous potential for growth in coming years. This is growth that we as a country need, and small firms must be given the chance to benefit from the opportunities on offer.”
SMEs have a powerful role to play in shaping a greener future – and the benefits of acting are greater than ever. Whether you’re starting small or planning bigger changes, now is the time to move your sustainability plans forward. Take the next step today: assess your emissions, explore the support available and start heading toward net zero today.
This article comes courtesy of Howden – an expert insurance group that does insurance differently, offering flexible, high-quality cover, and reassuringly straightforward service, while using insurance as a tool to increase resilience. United by a no-limits mindset, Howden is a powerful and passionate team, rising to any challenge to do right by your business.
