With the recent climate summit, COP26 held in Glasgow, governments from around the world met to agree on goals in order to achieve net-zero and combat climate change. A big talking point of the summit was what businesses, and in particular small businesses, can do in order to help drive the UK to net-zero.

Small businesses can play a key part in helping reduce carbon emissions in the UK, but this task seems so big that it's often difficult to navigate. With the importance of these issues and the impact they can have on small businesses and what they are allowed to do, it’s important that everyone play their part.

Read more in this informative guide to net-zero and how small businesses can contribute to the effort.

What is net zero?

The phrase net zero refers to the attempts to balance how much greenhouse gas we add to the environment by simultaneously removing that same amount. We know that a pure zero emissions goal is impossible which is why the UK government decided to focus on net zero goals instead. When we're removing as much carbon from the atmosphere as we're creating, then net zero will have successfully been achieved.

This effort to significantly reduce emissions has come about due to some very worrying statistics around climate change. According to the World Meteorological Organization, the 20 warmest years on record have all taken place in the last 22 years and the warmest 4 have happened since 2015. The global temperature is now 1 degree warmer than it was in the pre-industrial area and globally, people are working to prevent that from rising any further.

While 1 degree may not sound like much, we're already seeing a negative impact from as extreme weather patterns and events become more common. Luckily, there's also huge potential to reduce emissions both personally and professionally. However, in order to understand reducing emissions as a business, you'll first have to understand the three emission categories that have been defined.

Categories of emissions

When talking about net zero efforts, you may have heard about three different emissions scopes that help businesses define and identify all the different ways their business contributes emissions to the environment. To truly be net zero, a business needs to think about managing all three level.

Step 1

These are the emissions your business is directly causing such as fuel burned by driving company cars or using the boiler to heat an office. For bigger companies, it may include on-site manufacturing processes.

Quick fix: Create a plan to phase out fuel burning equipment and replace it with more efficient or electric equipment.

Step 2

These are indirect emissions that are created on behalf of your business such as the electricity to keep your lights on or the energy used to heat and cool a building.

Quick fix: Find energy suppliers that use renewable energy or look for green tariffs that help offset your usage.

Step 3

These are a bit harder to grasp, but think of it as emissions created by suppliers, distributors, transit services, waste management services and other organisations that you work with. While this scope isn't fully under your control, according to the Carbon Trust, it’s also where 65% - 95% of your carbon emissions come from.

Quick fix: Look for companies and services that have greener practices and try to push any partner that you can't switch away from to take net zero goals seriously too.

What goals have the government set for Net Zero?

In the summer of 2019, the UK set ambitious goals for getting to net zero emissions and they were the first major global power to do so. Their goal is to reduce the UK's net greenhouse gas emissions by 100% relative to 1990 levels by 2050.

Given the massive cultural and procedural shifts that will need to happen to meet these goals, 2050 was seen as the earliest realistic date for net zero to happen. It is ambitious; the next 30 years will be a push to balance the need for swift action with the reality of getting all the necessary infrastructure in place.

It's important to also note that each of the four nations may be taking a slightly different variation on the wider UK goals. Scotland has committed to meeting net zero by 2045 while Northern Ireland has said they'll only be able to reduce emissions by 80% in 2050 due to their large agricultural industry. It's worth checking out the goals specific to your area so that you know exactly what to expect.

The UK Government feels that continually working towards and eventually meeting these goals will help businesses in the long term by:

  • Making them eligible for certain tax benefits
  • Creating more sustainable supply chains
  • Keep a competitive advantage
  • Attract new customers, investors and stakeholders
  • Create bigger savings by reducing long and short term costs of running the business

Why is it important for small businesses to get involved in net zero

Every business, no matter how small, creates emissions. Without buy-in from the UK's business sector, the dreams of net zero by 2050 won't be possible. There are over 6 million small businesses in the UK that make up 99% of the country's industry. And those small businesses employ 60% of the UK workforce all while generation £2.2 trillion for the economy. Needless to say, small businesses are a force to be reckoned with, so it's vital that they be part of the plan.

At the moment, however, the British Chamber of Commerce estimates that only 9% of small businesses and 5% of microbusinesses are measuring their carbon impact at all. Considering that the current government regulations only require businesses with 250 employees or more to report their emissions, it's easy for small businesses to slide under the radar.

Given that the sometimes overwhelming task of decarbonisation requires additional time and resource, small businesses might be tempted to forego these efforts, but that might not be the best move for your business in the long-term.

Here's a few reasons why small businesses should get on board with net zero:

Consumer trends & public opinion
Government Data from BEIS shows that 80% of UK residents are concerned about climate change and research by Deloitte states that consumers have already started taking actions personally to help the environment. This includes 34% saying that they're intentionally choosing brands that have good environmental and sustainable practices. As such, businesses making visible and ambitious actions to cut emissions will be aligning themselves with consumer preferences and may gain new customers as a result.

Attracting talent
In the midst of the great resignation, competition for employees is fiercer than ever. While it may not be a top deciding factor, over a quarter of UK workers want to work for a company that cares about the environment. Many are even willing to take a pay cut to move their talents to a more sustainable business.

Cost savings
Getting to net zero may require some upfront investment, but in the long run you'll have a more efficient business. While it's hard to make that initial investment, there will often be long term savings that see you earning that investment back and then some. Small updates to equipment and practice may also create short term gains as you quickly see reduced energy bills or fuel consumption.

Future proof your business
While the current reporting requirements may only apply to larger companies, net zero measuring and reporting mandates could come to small businesses one day. Taking steps now will put you ahead of the game and may help you identify ways to streamline existing processes, giving you an advantage over competitors.

Attract future investments
Funding, grants, investments and tax benefits for green businesses have become more common lately and making moves towards net zero could unlock these for you. Taking concrete steps towards going green will also assure existing investors and stakeholders that you're properly prepared for a net-zero future.

How to make a net zero plan

1. Get a baseline measure:
The British Chambers Organisation says that just 11% of businesses measure their carbon footprint. It's impossible to measure your reduction efforts if you don't know where you're starting from though. A sensible first step is to get familiar with the emissions currently being caused by your business. Take a look at resources such as the UK SME Climate Emissions Hub, the Greenhouse Gas Protocol, and the Carbon Trust’s website to get started calculating your impact.

2. Analyse your business:
Decide what falls under your scope one emissions and what you really have control over. What do you see as the beginning and end of your business? What processes do you wholly own? Based on this definition, work on identifying the biggest carbon creators in your business. Often 80% of your emissions come from just 20% of your operations. Figuring out which operations create that 80% will help highlight areas that need to be addressed.

3. Set clear targets:
Of course, we're all working towards the main goal of net zero by 2050, but that's pretty vague. Breaking down your goals into multiple SMART goals will help define your path further. Think about targets for year on year emission reduction, how you'll monitor and measure success, and what reasonable timeframes are for each of your targets.

4. Start small:
Many people consider scope two emissions to be some of the simplest fixes to make, so why not start there? If you try to approach net zero by starting with the big stuff, it'll feel like an impossible task. So, take on the immediate small changes first and give yourself time to properly plan for and work up to the bigger changes.

5. Create accountability:
Share your sustainability journey publicly! Let your customers, employees, and stakeholders in on the plan so that they can help hold you to it. The more detailed and actionable the plan is, the better. If the plan sounds too vague, people may think you're trying to greenwash the business without taking any real steps forward.

What do businesses have to do to achieve net zero?

Switch to a renewable energy provider:
This will help to directly reduce your carbon emissions by moving your business away from carbon-based energy production.

Adopt green energy tariffs:
If your energy provider doesn't utilise renewable energy themselves, perhaps they have green tariffs. These tariffs work by matching 100% of the energy a business uses with electricity generated from renewable sources. So, every megawatt-hour of electricity a business uses will be matched with the same volume of renewable energy supplied to the grid, effectively making the energy that business purchases from the grid carbon-neutral.

Installing energy saving light bulbs such as LEDs:
LED lighting uses on average 90% less energy than most traditional bulbs, bringing down a company’s overall energy use and consequently, its carbon emissions.

Start a cycle to work scheme for employees:
Many cycle to work schemes boast that your employees to save upwards of 25% of the cost of a new bike and that as an employer you might see a savings on your NICs. Between that and helping the environment, it's a no brainer.

Install smart meters:
These will help keep energy usage in check but automatically turning off when a system senses the energy or heat no longer needs to be on. If you're prone to forgetting to switch off lights, take the responsibility off your plate with smart tech. These systems can optimise your timing and temperatures so that there's no wastage.

Make it a team effort:
Appoint some employees to act as sustainability champions and have them encourage the rest of your team to become involved with their initiatives.

Reduce waste:
Analyse your business practices and see where waste can be reduced. Use AV equipment to jointly look at reports rather than printing them for everyone and find ways to store company documents digitally. If you create products, look at how there can be less waste in the packing or the creation of the product itself.

Offset the carbon you can't reduce:
Offsetting should be a last resort for the emissions that are nearly impossible to eliminate. This can be done by supporting carbon sinks such as forests, wetlands and peatlands, all of which help naturally sequester carbon.

Recycle more:
For any products that you can't reduce the use of, be sure to have a full recycling provision available. You're still reducing waste by putting paper, plastic and other materials into a circular economy. Similarly, look to use recycled materials for your packaging and other office or product needs.

Switch up your supply chain:
Look into working with suppliers who are also trying to lower their emissions and look at sourcing materials or using products that take less energy to make.

Use public transport or drive electric:
Over a quarter of the UK’s total carbon emissions due to petrol and diesel transport, so cutting down the driving is a great move. Using public transport instead is a helpful switch and where that's not possible, trying to use low-emissions company cars can help. Consider switching any company vehicle to an electric or hybrid model.

Insulate your buildings:
A building that stays warm or cool due to insulation won't constantly need the heat or cooling on to maintain a certain temperature. That creates a cost savings for you and creates less carbon for the environment – a double win!

Support for becoming Net Zero

Many businesses are interested in becoming greener but find barriers in their way. The two main barriers that the British Chambers found for companies trying to be more sustainable are high upfront adaptation costs (34%) and a lack of finance (30%). Getting access to grants (28%), tax allowances (14%) were listed as the two main ways businesses wanted support for reducing their carbon emissions.

This call for help has been heard and there's a variety of support, both financial and informational, available to businesses who are ready to work towards net zero.

Of course, there are many more websites and tools out there for you to explore, but this gives you a starting point for beginning on your net zero journey.

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All links are checked and valid at time of publishing, 26 April 2022.