Posted: Fri 13th Jan 2023
The government needs to introduce improved support and financial incentives to help small businesses become active participants in the UK's race to tackle climate change.
That's a call by former energy minister Chris Skidmore in a major review of the government's effort to reach net zero carbon emissions by 2050. He was asked to deliver it by former prime minister Liz Truss to ensure the actions are "pro-growth and pro-business".
His report warned that delaying activities on dealing with climate change could damage the UK's economic growth. The government needs to act "quickly and decisively", it said, as "there is a new global race to maximise the growth potential from net zero" with the world now at "a crunch point where the UK could get left behind".
Skidmore claimed that with the UK behind on some targets, a "new approach to our net zero strategy" is needed. The report said:
"We have heard from businesses that economic opportunities are being missed today because of weaknesses in the UK’s investment environment – whether that be skills shortages or inconsistent policy commitment.
"Moving quickly must include spending money. We know that investing in net zero today will be cheaper than delaying, as well as increasing the economic and climate benefits."
Helping small businesses participate in net zero
The review said small and medium sized businesses (SMEs) need to be "active participants in net zero" but they face barriers.
It highlighted research from the British Business Bank which showed that small and medium-sized companies are responsible for around half of the total carbon emissions from UK businesses and 30% of all the emissions that the UK produces.
Many small businesses are keen to take actions to reduce their negative impact on the environment, but they are restained by time, cost and a lack of knowledge about what to do and what support is available.
A report in February 2022 by Enterprise Nation, Aviva and Enterprise Trust, found that while most small business owners do want their firm to make a difference, only one in five said they will be taking steps to become more sustainable.
The report said:
"SMEs often do not have the capital to pay the upfront costs and if they do the payback period for net zero initiative can be uncomfortably long.
"SMEs need to be empowered to take actions to improve the greenhouse gas emissions impact of their business and capitalise on the financial benefits from the transition."
The review said better and more targeted support from the government is needed to encourage small businesses to take action.
Drawing on the model of the Help to Grow: Management Course, it called for the introduction by 2024 of a 'Help to Grow Green' campaign, with information, resources and vouchers for SMEs to plan and invest in the net zero transition.
The review also said the government should set up an SME role models programme this year so founders can be inspired by those business owners although taking steps to reduce their carbon emissions.
Another area that needs work, the review said, is tax and other financial incentives. It recommended that part of the wider review of the tax system to incentivise investment in decarbonisation should include SMEs and consider incentives to improve their uptake of energy efficiency technologies.
The Enterprise Nation net zero research found that if more financial support or grants were available, half of the small firms surveyed said they would adopt environmentally friendly business models and solutions.
Finally, the review said the government needs to tackle "the prisoner effect" which means green actions by small businesses are constrained due to their tenant status in a building. It said a taskforce of suppliers, small business landlords and business groups should be established this year to agree on how to cut energy use in rented premises.