How SMEs can achieve net zero in the absence of government support

At the end of March, the government announced its ‘powering up Britain’ strategy or, in other words, a net zero plan intended to boost energy security and reduce harmful emissions amid pressure from environmental groups and intergovernmental bodies.

This pressure, most notably, came in the form of an earlier warning from the Intergovernmental Panel on Climate Change Sixth Assessment Report (IPCC AR6), which urged governments to make stronger commitments in order to reach global net zero goals.

Many have since argued the government’s strategy did little to appease the concerns of those putting pressure on them to implement meaningful change. One way in which it fell short was the lack of guidance it set out for the UK’s small and medium-sized businesses looking to reduce their emissions. As well as being integral to the growth of the UK economy, SMEs also account for around half (43-53%) of greenhouse gas emissions by UK businesses, and are therefore integral to the nation’s pursuit of reaching net zero by 2050.

Not only that, but SMEs also benefit from having a net zero strategy. Ecologi’s recent survey which polled 1,000 UK SME business owners and decision-makers at businesses up to 250 employees, found that 98% of SMEs who have set environmental targets, had experienced some business benefits. These range from improved brand image (43%), attracting more eco-conscious customers (38%), increased productivity and innovation (37%) and employee loyalty (34%), with over a third (31%) seeing increased revenue.

SMEs have the desire to get to net zero but need a little help – more than four in 10 (41%) of SMEs said they would like their business to have a net zero strategy but feel confused about how to get started. Over half (52%) of the respondents would measure their carbon footprint if it was free and straightforward to do so. They also lack the guidance and, as a result, just 44% have set net-zero targets and only a quarter (26%) of SMEs that have set targets are set to reach net zero by 2050. To overcome these barriers, half of all SMEs also believe the government should provide better initiatives to support businesses seeking to improve their environmental efforts.

How then, can these businesses overcome the barriers facing them, including a lack of government support, and pursue net zero with assuredness? And what can the government do to better support SMEs in this regard?

Pursuing net zero

Pursuing net zero requires a long-term commitment and sustained effort, but the benefits are substantial, including outputs such as improved performance, reduced spending, an enhanced reputation and, of course, a smaller carbon footprint for the benefit of our climate. And while it may seem like an insurmountable task to begin with, it’s actually much more achievable when you break it down into the following steps.

Firstly, you must commit. There must be an acknowledgement that your business can be part of the solution and needs to change. Net zero doesn’t happen overnight, it requires systematic processes and structural changes across the entire value chain. Relevant internal stakeholders need to understand the reasons for change and buy into the process.

Next, you'll need to calculate your emissions. Calculation is key to understanding your starting point, identifying emission hotspots in your value chain, and seeing the greatest opportunities for reduction. Once you’ve measured your emissions and established a starting point, you can begin to analyse your footprint and identify a suitable transition strategy to decarbonise your operations.

Once a strategy has been established, it’s essential to start implementation by following a logical and achievable set of steps to reduce your total emissions by 90%. This is a big ask and clearly not an overnight process and must also align with your business environment to be economically sustainable. Working with your supply chain is crucial, as for many businesses up to 90% of emissions can come from their value chain.

The penultimate stage of net zero occurs after the significant 90% reduction has been achieved, and it’s the removal of unavoidable emissions through buying and retiring carbon removal credits. Under the SBTi Net-Zero Standard, only up to 10% of your overall emissions against the base year can be removed in this way. You may, however, use carbon avoidance credits throughout your journey to becoming net zero, whilst reducing your business emissions on your journey to net zero as part of ‘beyond value chain mitigation’ or BVCM.

Lastly, once you’ve taken action to reduce your emissions, you’ll return back to the calculation stage to assess the difference your changes have made, then re-evaluate your strategy and next steps. You’ll likely have to go through this cycle a number of times before you have achieved the required level of emissions reductions and transitioned to a state of net zero. Then it’s time to really celebrate, as you can be certified as net zero under the SBTi.

Government support

There are also a number of key steps the government needs to take to ensure the SME community makes the net zero transition and, subsequently, the UK meets its target. These include the more commonly referenced forms of support such as greater funding (and improved awareness to access funding), the introduction of net zero regulations and clearer guidance and technical advice.

According to Ecologi’s recent survey, 50% of SMEs also believe the government should provide better initiatives to support businesses seeking to improve their environmental effort. While the UK government has launched some effective support schemes to help SMEs, such as the Industrial Energy Transformation Fund, which provides grants for businesses to invest in energy-saving technologies and processes, this figure paints a clear picture that more needs to be done.

Put simply, we need to make sure that every SME, no matter how small, has access to affordable and easy-to-use tools and solutions. From measuring carbon footprints, through free carbon footprinting platforms like Ecologi Zero, to gaining insights to inform emissions reductions, all whilst funding the best climate action projects. And by providing funding, technical assistance, and support schemes, the UK government can help SMEs in the net zero transition, reducing emissions and contributing to the UK's overall net zero target. The world of business is already willing and pitching in, but we need all stakeholders to help accelerate this further to ensure this target is met.