Wind Power and the Green Prosperity Plan 

Recently, wind turbines have overtaken gas as Britain’s primary electricity source, marking the lowest reliance on fossil fuels in over a decade. This shift underscores the growing importance of wind power, particularly as Labour accelerates efforts to decarbonise the nation’s electricity system through its Green Prosperity Plan – a £28 billion investment in low-carbon infrastructure. Despite budget constraints, ESG remains a top political priority, raising critical questions about the role of businesses, especially SMEs and startups, in this transition.

Government initiatives and opportunities for startups governments have launched various initiatives to align companies with ESG principles and encourage more startups in the sustainability sector. It does this by creating initiatives such as the Social Housing Decarbonisation Fund which is aimed at local authorities and housing associations, but which encourages them to consider sustainability in their procurement, providing opportunities for all companies, including startups. Other key initiatives are Invest 2035, the UK Green Finance Strategy, and the Energy Savings and Opportunities Scheme (ESOS). Again, they create opportunities for startups and SMEs as contractors or subcontractors delivering essential services.

Procurement Policy Notes (PPNs) are another opportunity. These outline ESG expectations for businesses bidding on public contracts, with a key requirement being a Carbon Reduction Plan to align suppliers with the UK’s net-zero target by 2050. Notable PPNs include:

• PPN 06/20: Promotes social value in government contracts using the Social Value Model
• PPN 06/21: Mandates that businesses bidding for major contracts measure and reduce their carbon footprint

Benefits of embracing ESG policies

There are other benefits from aligning your business with ESG principles

1. Access to finance and capital for startups, often cash-constrained and eager to scale quickly, robust ESG credentials can attract capital at lower rates. Strong ESG practices can reduce the weighted average cost of capital (WACC) by 0.2-1.1 percentage points (source: MSCI), with over two-thirds of VCs considering ESG in their investment process (source). The level of effort dedicated to ESG should align with your business model, sector, and size. Identifying material ESG topics using tools like the SASB materiality finder, and focusing on key areas such as carbon reduction plans and sustainable procurement, can drive growth and reduce costs.

Additionally, access to government grants to help business decarbonise should be considered by startups, as well as the usual list of grants; EU Horizon, Innovate UK, Seed Enterprise Investment Scheme, and British Business Bank startup loan.

2. Customer and value-chain requirements: ESG compliance can enhance top-line growth through public sector tenders and improved productivity. The government encourages SMEs to work with the public sector, and having a carbon accounting and reduction plan is critical. Online resources like the GHG protocol can help calculate emissions, optimising costs and realising ROI from efficiency initiatives. Larger businesses are increasingly looking for value-chain partners that align with their ESG goals, creating opportunities for startups to demonstrate their ESG maturity and reliability. Examples of this include, aligning with the larger companies Net Zero target by a carbon reduction plan, through to having relevant ESG policies, such as Anti-Bribery & Corruption, to ISO 27001 / 14001 credentials. By demonstrating ESG compliance, you position your business as a reliable and responsible partner, opening doors to collaborations that might otherwise be out of reach.
3. Legislation and Regulation: The EU leads with corporate sustainability disclosures, while the UK focuses on the financial sector. Key legislative changes include the requirement for all buildings to achieve an EPC rating of C by 2030, driving demand for retrofits, and restrictions on PFAS substances and single-use plastics. These regulations impact various sectors, creating opportunities for startups to innovate and lead in sustainability

By integrating ESG principles, startups can unlock growth, attract capital, and position themselves as credible, low-risk investments. Embracing ESG is not just about compliance; it’s about seizing financial and strategic opportunities in a rapidly evolving market.

It is easy to assume compliance from smaller businesses will have a limited impact on larger suppliers – however, a collective effort from many smaller businesses can make a significant difference. This ripple effect is crucial to achieving the social component of ESG.

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