The research, entitled Small businesses advice on net zero: discovery phase, was commissioned by a new coalition called the Zero Carbon Business Partnership, comprising several of the UK's leading business, energy, industry and education bodies including, amongst others, the Federation of Small Businesses (FSB), the British Chambers of Commerce, Confederation of British Industry (CBI), the British Retail Consortium (BRC), Make UK, Electricity North West, Northern Powergrid and Western Power Distribution. It is the first time that a coalition of this magnitude has come together to drive SME progress towards the UK's legally binding net zero target.
It finds that as small and medium enterprises (SMEs) emerge from lockdown and look to reconsider their investments, despite caring about cutting carbon, they are unsure where to start; where and how to get help; need to put financial viability at the heart of decisions to cut carbon, and have no time to research a net-zero strategy for themselves.
Miranda Barker, CEO of East Lancashire Chamber of Commerce, said: "Small businesses are the lifeblood of the UK economy, which means they have a critical role in ensuring we meet our net zero target. In order to help us get there, they need to be able to understand what net zero means, along with clear guidance from trustworthy partners."
The report calls for an advice service tailored for the specific needs of SMEs, which make up over 99% of businesses in the UK, provide 60% of all jobs, and nearly half the nation's business-related emissions. The research reveals that environmental impact is up there as a top priority for businesses, together with COVID-19 and growth.
Allen Creedy, DEFRA Policy Unit and Vice Chair EPU UK Policy Committee: "The UK Government's ambition for net zero cannot be realised without an empowered and supportive small business community. Evidence suggests that while small businesses support net-zero objectives, they do not yet understand their pathways to achieve this.
"That's why this platform is fundamental. It's an exciting project which will light a clear and consistent path to net zero, enabling the UK to becoming a powerhouse for low-carbon infrastructure, technology, goods and services."
The research finds that amongst a survey audience of UK trade association members, the top priorities for SMEs are balanced between COVID-19, growth and environmental impact. Despite that, the survey of 254 SMEs found:
- 71% could not recommend a single web source for help on decarbonisation.
- One third were not familiar with the phrase net zero.
- 57% rated the perceived importance of their environmental impact the top two scores of 4 or 5 out of 5.
- 40% said money was a blocker to taking action.
Steven McMahon, Deputy Director of Electricity Distribution and Cross Sector Policy at Ofgem, said: "Businesses want to play their part in tackling the climate emergency. It's timely that they are being given the tools to do this in the year that the UK hosts the UN climate change conference in Glasgow.
"This is just the start. It's great that some of the big players in the energy sector are joining the Zero Carbon Business Partnership to help small and medium sized businesses cut their greenhouse gas emissions and play a wider role in a cleaner, greener energy system."
The report highlights seven main requirements for SMEs to reach zero:
- Clear information - Businesses are confused by the language of net zero, unclear about what policy changes will affect their businesses, and necessary information is not reaching them. They require simplified and standardised language targeting SME climate action.
- Staying in business - SMEs care and are aware of the need to decarbonise, but they need help to reconcile carbon reduction with staying in business. Financial viability should be at the heart of messages about carbon reduction.
- Financial and digital literacy support - Those making faster progress towards net zero have better financial skills and digital literacy. 90% of all jobs will involve digital skills by 2025. Without collaborative, integrated solutions and support, many SMEs will struggle.
- Trust and transparency - SMEs trust trade bodies and business groups over institutions and official narratives. Within an information service, trade bodies could enhance trust and transparency through feedback about SMEs' experience of the net zero transition.
- Peer-to-peer relationships - SMEs need examples of good carbon reduction strategies. Peer-to-peer support structures, particularly at local levels, will enhance trust, capacity and confidence to act, particularly within as-yet immature low-carbon supply chains.
- Meeting the challenge of COVID-19 - SMEs are too stressed to think beyond immediate survival. Services must offer uncomplicated guidance for the first steps on SMEs' net zero journey, and show that a green recovery is the way to meet the challenge of COVID-19.
- A joined-up narrative - SMEs are more engaged with climate issues, even if they do not use the language of net zero. But pragmatic actions are hampered by confusion over definitions and meanings. SMEs need a joined-up narrative to cut through the confusing jargon.
Patrick Erwin, Northern Powergrid's Policy and Markets Director, said: "Decarbonisation requires significant action from every corner of our society. We're proud to be part of the Zero Carbon Business Partnership so we can help SMEs - which are crucial to the UK's economy - get the advice and support they need to contribute to net zero and benefit from a green recovery.
"Northern Powergrid has a vital role to play in enabling businesses to reduce their emissions and be part of a greener energy future. Our distribution network powers the region today - but we're also working to create tomorrow's network which will support the significant growth in connection of technologies like electric cars, solar panels and heat pumps needed to create a low carbon economy. This will be critical in helping the businesses and communities we serve achieve net zero and delivering a cleaner energy system for our customers across the North East, Yorkshire and northern Lincolnshire."
Richard Hagan, Managing Director of Crystal Doors, SME in Rochdale said: "I was in a proper crisis in 2015. I had to change, or I'd have had to close my business. So, I learnt as much as I could about climate change as quickly as possible - which is what everybody needs to do - and I turned it all around."
In the run up to the COP26 climate conference in Glasgow this November, the Zero Carbon Business Partnership is developing an information service that provides SMEs with the tools needed to begin cutting carbon and to resolve the issues highlighted in the report.
The provision will ensure SMEs are provided with clear and easy to follow advice and support on how to get started and ahead of the targets.
Earlier this month, Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng wrote an open letter to businesses, detailing the government's Plan for Growth. It stated that its three priorities for businesses were to Enable our transition to net zero', Unite and level up the country', and Support our vision for Global Britain'.
In response to the news that a third of the UK's biggest companies signed up to the United Nations Race to Zero campaign, Business Secretary Kwasi Kwarteng recently said "businesses wield incredible influence to drive change across society and the economy - we need to harness this power to fight climate change."
To launch the Zero carbon Business Partnership there will be special webinar presentations on Friday 16th and 23rd April from 09:30 - 11:00 for SMEs to learn more about the new provision.
About the Zero Carbon Business Partnership
The Zero Carbon Business Partnership is a collaboration of UK-wide business, energy, industry and education bodies. It includes: a growing circle of business organisations working through the Broadway Initiative, including: British Chambers of Commerce, British Independent Retailers British Retail Consortium, Confederation of British Industry, Federation of Small Businesses, Food and Drink Federation, Home Builders Federation and Make UK; energy networks including Electricity North West, Northern Powergrid and Western Power Distribution; and experts in decarbonisation including the Institute of Environmental Management and Assessment; Oxford University, the SME climate hub and Goal 13 Platform.
Methodology
The initial phase, the findings of which are presented in this report, used a combination of tools to answer these questions: workshops to define the problem, interviews to understand what's already happening, review of over 150 reports to understand what we already know, review of statistics to understand the business population, analysis of media and online search trends, a survey of 254 businesses and in-depth interviews with 42 businesses to understand the small business context for cutting carbon.
The discovery was carried out by digital agency Llibertat on behalf of the Broadway Initiative, and overseen by a steering group from the partnership. It used fortnightly show and tells' with a community of over 50 stakeholders to share feedback on emerging findings.
To ensure a spread of perspectives we segmented, recruited and interviewed 42 businesses:
- from every country and region in the UK
- with a variety of number of employees: 0-9, 10-49, 50-99, 100-250
- from the following sectors: construction; manufacture; ICT/technology; art, entertainment or recreation; retail & wholesale; domestic & household; professional, scientific and technical; human health or social care; electricity, gas, steam & air conditioning; accommodation and food; agriculture, forestry & fishing; real estate with a range of carbon-relevant assets
