UK SMEs account for almost a third of domestic greenhouse gas emissions, while lagging behind larger businesses in efforts to reach net zero. That’s the latest finding from a survey by the British Business Bank (BBB).

The Government-backed institution found that just 3% of smaller businesses claimed to have measured their carbon footprint or set emission reduction goals over the past five years.

Shanika Amarasekara, BBB chief impact officer, warns that SMEs which don’t cut their emissions but which continue to sell to big businesses could begin to see contracts fall away, as larger firms work to reduce their supply chain carbon footprint. “What’s going to happen in the future is that they will be part of supply chains of larger businesses that are going to be making those demands of them. It’s becoming a licence to operate. It is going to become the competitive differentiator for smaller businesses.”

With SMEs and larger corporations accounting for approximately half of all UK business emissions, Catherine Lewis La Torre, BBB chief executive, argues ‘more needs to be done’ to encourage SMEs to ‘prioritize decarbonization’.

The Government … expects the free market to adjust and solve the problem over the next 15 years, but without greater leadership, direction and regulation, the transition at SME level will happen very slowly

The survey found that 11% of companies have taken out loans to help fund their transition to net zero; a further 22% are open to doing the same; and while 94% of companies had taken at least one emission-reducing action, their efforts ‘did not go far enough and could simply be installing a smart meter’. 51% took action because it ‘made financial sense’ and 52% of SMEs have become ‘carbon complacent’.

Richard Smith, partner at Sandstone Law, comments: “These times are hard for many small businesses, with some still trying to recover from the dramatic impact of the pandemic and others caught by fuel price rises, haulage cost increases, higher taxes and Brexit problems. Contributing to the fight against climate change and reducing greenhouse gas emissions is, for many, another cost that is hard to bear, even if they want to reduce the carbon footprints of their businesses. The Government has provided very little support and guidance to small businesses in the move towards a net zero carbon economy. It expects the free market to adjust and solve the problem over the next 15 years, but without greater leadership, direction and regulation, the transition at SME level will happen very slowly. Big businesses will certainly give their supply chains a green tweak, as they did 30 years ago with CFCs and waste reduction, but without central Government guidance and useful carbon reduction toolkits for different business sectors, the change may continue to be too little too late.”

For advice and resources on reducing carbon emissions, visit the SME Climate Hub.

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