Why small businesses need to think about climate change too

Many large companies are developing net-zero strategies, but what about smaller firms?

These days it seems like every Tom, Dick and multi-national corporation has a lavish sustainability programme, designed to help protect the environment for generations to come.

Whether it’s craft beer giants, Brewdog, promising to plant 1m trees in Scotland by the end of the decade or financial services firm Aegon committing to net-zero emissions by 2050, sustainability is now big business and a regular feature in boardroom meetings.

A survey of business leaders published last month by the British Standards Institution (BSI) found 7 out of 10 said their company has made, or is considering making, a solid commitment to achieving the government’s 2050 net-zero goal.   

But what about smaller firms, who might not have the same resources as an international company? What can they do to reduce emissions? And why is it important for them to take action, when there are much bigger firms with larger carbon footprints?

Make no mistake, small companies are big business. Government figures show that SMEs account for 99.9% of the UK’s business population, with around 5.9m firms. Of those, 5.82m SMEs employ less than 49 people. The SME sector as a whole, employs 16.6m, which is a quarter of the total population.

Official figures also show that business and industry account for 25% of UK territorial emissions, with just under half of these emissions from SMEs, which therefore means they could play a vital role in the UK’s journey to net zero.

But the BSI survey also found just one in five small businesses have committed to a net zero target, in contrast to 50 per cent of their larger cousins.

Given current circumstances, it is understandable that sustainability might not be at the top of the agenda for small and medium sized enterprises (SMEs).

A recent survey by the Federation of Small Businesses (FSB) warned that one in five firms have reduced headcounts in three months to December, and one in seven expect to do so in the first quarter of this year.

And nearly 7 out of 10 business chiefs told the BSI that their plans to achieve the carbon neutrality target have been pushed back by the pandemic, as other corporate priorities have taken centre stage.
But against the backdrop of coronavirus, the government has been making a series of announcements, designed to encourage more businesses to think about the environment, from Boris Johnson’s 10-point plan for a green industrial revolution to the appointment of Conservative MP Andrew Griffith as the UK’s net zero business champion.

‘Small businesses can play a critical role in helping the UK reach its green targets and shore up supply, but they need support to make sure they don’t get left behind,’ the national chair of the Federation of Small Businesses (FSB), Mike Cherry, tells Air Quality News.

‘With COP26 on the horizon, all eyes are on businesses to up their environmental game, but there needs to be strategic incentives. Businesses must be given the right motivational tools to help them make necessary long-term changes and plan budgets appropriately.’

‘Businesses want to work with the government to deliver this, which is why FSB and the UK’s top five business groups (CBI, Make UK, BCC and IoD) are committing to creating a Net Zero UK by 2050, underpinned by five core principles. These are ambition, accountability, delivery, opportunity and cost.’

‘The government’s latest announcement to create 250,000 new jobs in a Green Industrial Revolution is also a positive blueprint for post-pandemic recovery. It’s good to see a commitment to increasing electric car and van charging points, but gaps remain, as there is no proposed solution for supporting the affordable development and roll-out of more environmentally friendly HGVs,’ adds Mr Cherry.

‘In the short-term, sustainability is key. Small firms can play their part by switching to renewable energy suppliers, reducing plastic usage and waste in offices, turning lights off, planting trees and educating employees through carbon literacy training.’

Perhaps reassuringly, a survey last year by the Carbon Trust found that 80% of SMEs said they are taking action on energy efficiency, with more than half (51%) of those surveyed saying they wanted to do more in this area.

But it also found that two thirds (68%) of SMEs do not have a consistently documented and implemented energy policy, and a lack of time and money was cited as the main barrier to improving energy efficiency.

The chief executive of ClimateCare, Vaughan Lindsay, says there are certainly some steps small businesses can take now to tackle climate change and ‘start their journey to net zero’.

‘When people think about reducing the climate impact of their business, they think about recycling, working from home, going paperless and turning off the lights, and these are really important steps to take, but they are just the start,’ he tells Air Quality News.

‘Businesses need to take responsibility for their entire carbon footprint in order to achieve a net zero position. Anything less than that is not a responsible position for a business today.’

‘At its most basic, this is a step-by-step process with a hierarchy of actions. To start they need to measure their emissions using one of the many carbon calculators available to understand what their footprint is. Once they understand what this footprint looks like they must then eliminate what they can (such as non-essential air travel), and of course reduce what they can’t completely eliminate, such as energy use. Finally, they will need to offset the remainder, their residual emissions, through financing an equivalent amount of emissions reductions outside of the business.’

‘Whilst there is much that business can and should do to take responsibility for their emissions, government leadership is required to ensure we move at pace in the coming months. They need to set a strong policy environment with a clear direction of travel and plans to incentivise, enable and catalyse change at the speed required to put net zero within reach of businesses both large and small,’ adds Mr Lindsay.

Realistically, the big issue for many companies right now is just staying afloat, but as the nation waits for brighter days, other issues will move back up the agenda. And when they do, small businesses will have a big role to play in climate change.

Tips for making your business more sustainable 

Achieving the UK’s net-zero by 2050 target, and driving a sustained effort to combat climate change, will require all businesses, regardless of size, to play their part. Collectively SMEs make up 99% of the UK’s business population — so their actions have a huge impact on the future of our planet,’ says Opus Energy’s sales and service director, Rob Milloy. 

‘Our research shows the Covid-19 pandemic has made SME owners more environmentally conscious. Whilst during the pandemic many will be focused on simply staying afloat, there are some relatively easy steps SMEs can take to reduce their carbon emissions that will also work for their business’ needs.’  

1. Start small 

There are plenty of small steps that over time, end up going a long way towards reducing emissions. These include: 

• Turning the office thermostat down by 1°C, which can reduce annual heating bills by up to 8%.  
• Using energy-efficient lighting, which can save businesses about £1,500 a year.  
• Adopting a company-wide switch off policy. While it may seem trivial, leaving 50 computers on overnight for a year would create enough carbon dioxide (CO2) to fill a double-decker bus — and cost a business over £600 a year.  

2. Choose the right vehicles 

With the government looking to end the sale of internal combustion engine cars by 2030, businesses need to act now and make sure they are choosing the right vehicles to futureproof their operations.  

If businesses operate fleets, or offer their employees company cars, switching to EVs can offer significant savings. With government grants to offset the purchase cost, tax incentives, and lower maintenance and running costs, the savings can soon add up 

3. Install a smart meter 

The UK Government estimates that introducing energy efficiency measures could reduce the SME’s energy costs between 18% and 25%.  

One way of doing this of this is to install a smart meter, which gives SME owners access to real-time data-related insights into how and where they use their energy. This transparency allows businesses to be smarter and more energy-efficient, providing them with an easy way to be more sustainable.

4. Invest in renewables 

If a business has already switched to a renewable energy tariff, the next step may be to look into generating their own renewable power. Installing solar panels, for example, is a cost-effective way of ensuring the electricity used is entirely renewable. It also enables businesses to diversify, bringing in a new stream of revenue. If done right, it can be low effort, high impact and great for the environment. 

Making the switch to renewable energy not only reduces environmental impact but contributes towards wider decarbonisation across the UK’s electricity network too. 

 This article first appeared in the February Air Quality News magazine, which is available to view here.