Small and medium enterprises (SMEs) are vital to UK decarbonisation – how do we meaningfully engage them?
8 October 2020 – Beverley Cornaby, Senior Programme Manager in the Policy Team at CISL reflects on how small and medium enterprises (SMEs) can help shift the UK economy towards net zero by 2050.
In conversations I’ve been having recently, a question keeps coming up – how do we meaningfully engage small and medium enterprises (SMEs) in achieving the UK’s net zero emissions by 2050 target?
This is no small question – 99.9% of all British businesses are classed as SMEs covering all sectors of the economy. Around 5.82 million of these businesses have fewer than 49 employees. SMEs employ 16.6 million people meaning they represent 25% of the UK population – a significant proportion.
Their contribution to emissions is also significant, if broadly spread. Business and industry account for 25 per cent of UK territorial emissions (source: BEIS), with just under half of these emissions from SMEs. If we are to shift the whole economy towards net zero emissions, SMEs therefore have a vital role to play.
This is a viewpoint shared globally. New York Climate Week saw the launch of the ‘SME Climate Hub’. Co-hosted by the International Chamber of Commerce (ICC), the Exponential Roadmap Initiative, the We Mean Business (WMB) coalition and the United Nations Race to Zero campaign it is a ‘one-stop-shop climate action platform for SMEs to curb carbon emissions, build business resilience and gain competitive advantage’.
Through the SME Climate Hub, businesses with less than 500 employees, can sign the ‘SME Climate Commitment’ to:
- Halve greenhouse gas emissions before 2030
- Achieve net zero emissions before 2050
- Disclose progress on a yearly basis
As a global platform, making this commitment immediately enables a business to be recognised by the United Nations Race to Zero campaign. However, to get there requires an SME to understand the need to step up and commit.
This first step requires an understanding that every business, no matter what size, has a role to play. Many SMEs have already begun this journey, including our newest CLG member, Low Carbon, our first member at Associate (SME) level.
I first encountered Low Carbon four years ago through a CISL customised executive education programme. Set up with a purpose to tackle climate issues by investing in renewable energy at scale, since then, I have seen Low Carbon evolve at pace, from embedding sustainability values at the core of their business to achieving B Corporation status to setting their own net zero target.
As they have recognised, setting targets alone will not get us to net zero – it must be followed by action. They are already putting in place their own comprehensive action plan for how they will deliver against this target. While some SMEs may understand this need to act, many will require support.
Through our Accelerator and Sustainability Hub, CISL is supporting SMEs wanting to integrate sustainability into the core of their business operations. A key theme of this is in building resilience, vital in the light of the major disruption all businesses have experienced this year.
Supporting businesses to be set up and develop on these sustainable foundations can enable them to thrive in a net zero economy. Supporting them to take this step is also vital if we are to shift the whole economy. However, the number of SMEs CISL can engage compared to the total number is just a small percentage.
Which brings me back to my original question - how do we meaningfully engage SMEs in achieving the UK’s net zero emissions by 2050 target?
The above is a start, and one that can be built on substantially over the coming year, especially in the lead up to COP26. We have identified three areas we see as important, as follows.
Collaborative action is key to reaching SMEs in all sectors of the business community. Through the UK Business Group Alliance for Net Zero, we are working with other business groups leading on climate action, including sector specific groups such as the UK Green Building Council (nearly a fifth of SMEs operate in construction), to support the UK Government’s plans to engage SMEs in net zero.
SMEs will require support to enable them to understand what net zero means to them. CISL will be seeking to engage more SMEs through its Understanding Impact programme. CLG will be working alongside WMB to promote the SME Climate Hub and engage more SMEs in taking the ‘SME Climate Commitment’.
Leading SMEs have an opportunity to speak out to guide other SMEs and policymakers in the actions they can take. CLG is seeking to recruit further SME members who are leading on net zero action and commitments in their sectors. Through bringing the voice of progressive SMEs to policymakers we hope to explore the measures government can take to provide the policy certainty all SMEs require to commit and take action. The CLG is also exploring the role its core members can play in engaging their supply chains through collaborative action to deliver a resilient, net zero economy.
To find out more about the CISL Accelerator, download our flyer or get in touch.
This blog was first published in BusinessGreen on 8 October 2020