SMEs left behind in government net zero goal

Small businesses are being neglected as government focuses on big businesses to achieve its 2050 net zero commitment

Small businesses aren’t getting enough support to help the UK reach net zero, according to a new report.

It highlights that 99 per cent of British businesses are unlikely to be ready for the increase in carbon reduction policy and regulation, with the government focusing on large companies and the highest carbon emissions thus far.

Neglecting small businesses puts 52 per cent of the government’s turnover at risk and excludes a quarter of the workforce, meaning that the UK won’t meet its targets. The warning comes from Bankers for NetZero, a body made up of several banks aiming to identify initiatives before COP26 in Glasgow this November.

The UK has a legally binding target of net zero emissions by 2050. Official estimates in March show that emissions fell to 49 per cent below 1990 levels last year. This is partly down to reduced car traffic and industrial activity.

In order to help small businesses, Bankers for NetZero says that they need support using all of the following methods.

Financial incentives

This could mean:

  • Lowering the cost of capital by offering ‘green’ financial products and services, rewarding firms that invest in decarbonising operations with lower interest rates
  • Lowering taxes by offering business rates relief linked to carbon footprint or enhancing capital allowances for investments in decarbonisation
  • Incorporating criteria into government procurement rules that promote inclusion of SMEs in contractors’ supply chains and favours contractors with lower emissions

>See also: How can I reduce my business rates in England? A small business guide

Access to high quality information including advice on how to measure their carbon footprint and reduce it as well as how to finance the necessary investments

Standardised approach to measuring success when it comes to achieving net zero so that access to government schemes or green finance is not hindered by complex reporting requirements   

In response to the report, Jonathan Geldart, director general of the Institute of Directors, said: “SMEs have a crucial role to play in the race to net zero, and they are committed to playing their part.

“As argued by this report, what they need from both the government and the banking setting is a framework of information and incentives that supports their transition to decarbonised business models. This historical transition to a new way of doing business is unprecedented, and all parts of society will need to be aligned.”

Read more

Where to find green small business grants

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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Net zero