Getting the Green Light!

2021 is set to be a pivotal year for the green transition.

In the March budget, Rishi Sunak announced the launch of a National Infrastructure Bank. It plans over £90 million of government funding to power green technologies, and a host of other decarbonisation incentives.

But businesses have been driving the net-zero agenda and adopting green initiatives long before this government support.

SMEs are particularly instrumental to change. SMEs account for 99.9% of the business population in the UK, and 61% of the total workforce. This market share gives them a huge amount of leverage with regard to meeting national sustainable goals. Furthermore, their smaller size allows them to be more agile and flexible in their adoption of new operational practices. And indeed, many businesses from all sectors have taken it upon themselves to drive the net zero transition. A range of SMEs are working on hugely innovative business energy and carbon reduction projects.

The UK’s most noteworthy sustainable projects

Companies across the board have made impressive strides towards decarbonisation. In 2018, major housebuilder The Berkeley Group became the first carbon negative business in its sector, while EY announced earlier this year that it is also on track to attain carbon neutrality by the end of 2021.

BrewDog received much fanfare when it became the world’s first carbon negative beer business. The company removes twice as much carbon as it emits per annum through production operations. BrewDog had to begin with a clear audit of their current carbon emissions. BrewDog then opted for afforestation to offset their emissions, committing to create 1,500 acres of broadleaf native woodlands and an ecosystem with the Woodland Carbon Code accreditation program.

Right here in Gateshead, on Northern Gas and Power’s doorstep, we have a great example of a borough leading the way in terms of sustainability, with the Gateshead District Energy Scheme. Funded by Gateshead Council, the scheme provides heat through 3km of pipes and electricity through a private wire network to domestic, commercial and public sector customers, and was judged to be a “truly visionary” project by the Association for Decentralised Energy (ADE).

Ongoing obstacles to the net zero transition

Despite admirable efforts spanning a number of sectors, SMEs are still facing a number of obstacles to meeting their decarbonisation goals. SMEs are largely overwhelmed by the responsibility of net zero and its accompanying jargon. Small businesses are also chronically underfunded when it comes to decarbonisation programmes.

Energy monitoring, usage and disclosure is considered complex to the average small company. This is particularly true of the service sector, which accounts for 75% of UK businesses, but ultimately, identifying and then eliminating excess and wasteful energy use within a business can be the simplest way to reduce emissions and costs.

The financial considerations of transitioning to net zero are also front and centre for many SMEs. In the UK, 500,000-700,000 startups are launched each year. In the early stages of operations, decarbonisation will often take a backseat, in order to prioritise core business operations and profitability or resilience measures. And this is understandable, as 57.6% of businesses started in 2013 were gone by 2018. In other words, fewer than half of UK start ups make it beyond 5 years. This climate breeds an “every penny counts” mentality which means being ‘greener’ can take a backseat.

Regrettably, being sustainable is erroneously perceived as coming at an additional cost: 46% of businesses are worried about the potential economic impact of achieving net zero. In fact, reaching sustainable goals, from emissions disclosure, to achieving carbon negative status, is estimated to be far cheaper and easier than initially predicted. The Climate Change Committee assessed that a 78% cut in emissions by 2035 is affordable and achievable.

How can these issues be overcome?

Education is vital to ensure that SMEs are not wrongly dissuaded from adopting sustainable measures. It prevents them from being left in the dark about their net zero responsibilities.

A number of smart monitoring tools exist which give high energy users far greater control over their energy. These tools track energy and power consumption of any business’ circuits and devices in real-time, or by looking at historical data. From there, this software is able to identify energy trends by providing highly granular data. This allows SMEs to devise bespoke energy reduction methods, most suited to their business.

This is a similar process to the one adopted by BrewDog to become carbon negative. These personalised insights are helpful for businesses that feel overwhelmed by jargon, kWhs, energy policy and abstract net zero objectives.

Small and micro businesses have a huge presence in the UK business landscape, and therefore also play a big role in making the UK’s future greener. Education is a first vital step to improve awareness about energy management options. By understanding the choices out there and the technology tools at their disposal, SMEs can demystify and simplify the decarbonisation process. Technology illustrates the changes that can be made, and best practices can then be built into operational protocols and business personnel behaviours. In this way, sustainability becomes a far less daunting task.

With COP26 on the horizon and the world looking closely to the UK surrounding issues of sustainability, it is the actions of Britain’s businesses – especially SMEs – which can set us apart and allow the UK to emerge as a world leader in business sustainability. Only with the endorsement and commitment of these SME business owners can we achieve our net zero goals.

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Our breakdown of key moments and highlights in the ESG, climate compliance and sustainability reporting space.

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