Small firms hoping COP26 proves catalyst for change as report finds costs weighing on sustainability intentions

• With global summit underway, fresh Federation of Small Businesses (FSB) research finds majority of small firms concerned about climate change but only one in three have plan in place to tackle it
• Many already taking steps to make a difference, with large numbers addressing energy usage, increasing recycling and investing in microgeneration   
• UK’s largest business group urges government to launch a “Help to Green” initiative, roll-out a nationwide scrappage scheme and accelerate plans put to the Business Secretary over the summer to alter business rates to incentivise green investment   

Small businesses are keen to reduce carbon emissions, become more sustainable and achieve net zero status, but will require support and smart policies to help them along the way, according to a new FSB report, released today.  

The study, Accelerating Progress: Empowering small businesses on the journey to net zero, has been launched to coincide with COP26, as well as FSB’s Small Business Net Zero Conference, and pulls together findings from a 1,200-strong small business survey.

A clear majority (56%) believe that the planet is facing a climate crisis – but only a third (36%) have a formal plan in place to combat climate change within their business.

Many have, however, taken meaningful steps towards becoming more sustainable, with two thirds (67%) addressing energy usage, and nearly a fifth (18%) investing in microgeneration.  

Amongst those who have not yet taken action to reduce energy usage, a significant proportion cite uncertainty around return on investment (24%) and a lack of sufficient capital to invest in assets such as heat pumps and solar panels (22%).

Where waste is concerned, two thirds (64%) of small firms have increased recycling and half (50%) have taken steps to eliminate waste wherever possible.

With regards to the move to zero emissions vehicles (ZEVs), close to half (46%) of those surveyed cite the extra expense of ZEVs as a barrier to change, and a third (35%) say poor provision of charging points is holding them back – one in six (16%) cite the lack of an established second-hand market for ZEVs.

Over half (54%) of small businesses say that grants or low-interest loans would be a strong incentive to become more energy-efficient, while three in ten (28%) say a discount on business rates would encourage them to do so.

In light of the findings, FSB is urging the Government to:

• Launch a Help to Green initiative, modelled on Help to Grow, encompassing £5,000 vouchers that businesses could spend on environmental products and services. Vouchers could be used to fund an audit of a firm’s carbon footprint coupled with advice on how to reduce greenhouse gas emissions, or enable firms to replace equipment and materials to become more energy-efficient.
• Introduce a scrappage scheme through which diesel commercial vehicles could be recycled in exchange for grants that could be put towards cleaner hybrids and ZEVs –providing businesses with £2,000 for each qualifying disposal.
• Work with Ofgem to establish a taskforce of suppliers, small business landlords and business groups to agree how to cut energy use in rented premises. The taskforce could learn from examples where landlords and tenants have cooperated to green their premises, and consider further interventions to allow small businesses to take ownership of their own energy use.
• Lower the capital requirements banks must adhere to when lending to businesses for green improvements. Current capital requirements act as a brake on banks releasing funds in the form of loans to small businesses looking to invest in green technologies and improvements.
• Set out target-based infrastructure strategies to deliver necessary ZEV charging infrastructure by 2030. As things stand, the number of ZEVs being purchased is outstripping the number of charging and rapid charging points on motorways and highways across the UK.  

FSB National Chair Mike Cherry said: “Adopting sustainable practices on the journey to net zero is everyone’s duty. Small businesses are keen to play their part, but often don’t have the resources, deep pockets and dedicated specialists enjoyed by their larger counterparts, so can find identifying and taking the necessary steps a challenge.  

“With world leaders converging on Glasgow for COP, we need much more than a talking shop. This moment must be a catalyst, for governments to remove the barriers that are holding small businesses back. If we are to successfully transition to net zero, it’ll be through grassroots action, enabled by smart and supportive policies.

“Whilst the Chancellor rightly embraced some of our proposed changes in this area at the Budget, it was disappointing to see that the Government’s recent net zero strategy contained only four specific mentions of small business.

“We now need to see the changes announced last week brought in as swiftly as possible, so that small firms can install solar panels and heat pumps without fear of higher business rates bills.

“With inflation surging, cost is proving a significant barrier to the green investment we need. Small businesses require certainty and long-term support – they need to know for sure that their sustainable investments will be worth it in the long run.

“Equally, we have to avoid scenarios where landlords are barriers to progress – too often we hear from members who say they are ambitious when it comes to net zero, but the owner of their premises is less so.

“The challenge we face calls for practical action plans that can be implemented immediately, and we hope to see such plans emerge from this week’s conference.     

“There’s no shortage of enthusiasm among small firms to reduce their impact on the environment, and the Government should take note – our report sets out a range of comprehensive recommendations which, if taken forward, will equip our 5.6 million small business owners with the tools they need to build a more sustainable future.”