Sustainability projects offer advantages for startups beyond carbon reduction. They can lead to important cost savings; they can give an edge to small businesses which will attract environmentally conscious clients in tender processes; and they can attract skilled employees with similar changemaker mindsets seeking to align themselves with a green focused business.

Start by saving

Startups and small businesses are at the disadvantage of not having the same finances and capacity as larger, more established companies. However, the cost of decarbonising does not have to sit on your bottom line.

Startups and small businesses often face the challenge of having fewer financial resources and capacity compared to larger, more well-established businesses. According to Open Energy Market, when asked about their top priorities for the upcoming year, CFOs at larger companies demonstrate a more distinct emphasis on facilitating their business’ shift towards net zero (37%) compared to the national average (26%).

Nonetheless, the expense of decarbonisation does not have to sit on your bottom line.

The first step towards decarbonisation is having a working knowledge of your business’s current energy mix, including awareness of the usage trends across your business, and your consumption patterns throughout a month. This understanding of your business can be harnessed to reveal where cost and carbon savings can be made for the longer term.

External resources like the UK Business Climate Hub can serve as invaluable references for gathering information. These sources provide insights into sustainable practices, helping businesses without extensive resources make informed decisions.

As SMEs embark on their net zero journey, they must be cautious of unrealistic cost-saving claims for unreliable suppliers. Beyond financial gains, due diligence becomes essential. Each investment should undergo scrutiny to ensure it aligns with intended goals and contributes meaningfully to sustainability aspirations.

Despite the initial cost of green projects, they offer long term benefits for startups by making them more attractive to potential investors. Investors are increasingly valuing the sustainability credentials of SMEs during their assessment of a business’s growth and potential. This means, having the ability to demonstrate ROI on sustainability projects can help to justify upfront costs, in turn helping to encourage future financial injects from the investor community.

Backing up your net zero strategy with internal insights from your business which show where funds for the sustainability projects can come from will instill confidence in investors and C-suite executives.

Demonstrate viability

Another major challenge smaller businesses face when pursuing sustainability investments is a lack of access to information. For example, the sustainability requirements for warehouses tend to be quite generic and do not consider all the wider ESG factors.

Current instability in the market driven by changing policies, geopolitical conflict, and technological advancements, has made it difficult to obtain the practical information required to confidently make decisions about sustainability projects.

To overcome this, businesses should utilise project analysis and management platforms such as True, powered by Open Energy Market, which leverage real-time data on the market. For example, these types of platforms allow businesses to select a sustainability project, such as installing solar panels, and compare the financial impact over time of leasing, using capex, or using a power purchase agreement to fund the project.

To develop a compelling business case for sustainability projects, it is imperative to demonstrate financial viability and potential returns. This information enables decision-makers to see the accurate realities of their investments.

Rally support

The final major hurdle small businesses face in pursuing green projects is they lack employees dedicated to sustainability projects. However, some processes and initiatives can be put in place to foster a sustainability-minded company culture.

Limited capacity often prevents small businesses from establishing a dedicated sustainability manager, or team. To remedy this, it’s worth designating a ‘sustainability champion’ to integrate these values into the business’ core. Alternatively, seeking support from specialised experts, like those at Open Energy Market, can aid SMEs in managing market intricacies. This approach allows businesses to concentrate their efforts on operations and expansion. 

A notable advantage of being a smaller business is the freedom from legacy systems. This agility can allow businesses to embed sustainability into core processes from the outset. By fostering internal support among employees, a foundation for sustainability is laid. Involving them in this journey cultivates enthusiasm for green initiatives, underscoring the alignment of values and actions within the business.

When employees at all levels champion sustainability, it demonstrates a unified commitment to environmental responsibility, boosting project credibility and cultivating a sustainable culture. This also communicates to stakeholders, clients, and investors that the company’s dedication to sustainability is a genuine ethos upheld by all.

Conclusion

As the drive towards sustainability becomes more critical, startups and small businesses may struggle to navigate the increasing complexities of the energy market. However, these challenges can be overcome by having an accurate understanding of your company’s energy usage, assessing the financial viability of green projects, and securing internal support. By harnessing these pragmatic strategies, small businesses can navigate uncertainty, meaningfully contribute to sustainability, and demonstrate commitment to a greener future.