The research identifies the greatest challenges and biggest incentives for carbon reduction at small firms.
Published by the Federation of Small Businesses [FSB] and Zurich UK, New Growth: How to Support Small Businesses to Cut Carbon and Costs on the Road to Net Zero has found that 51% of small firms consider sustainability to be a high operational priority.
The vast majority of these companies said lower energy bills were the biggest incentive for low carbon investment, with 61% agreeing with this statement. That figure is significantly higher than it was in 2021, when this issue came out as the third most important reason to transition.
Almost two-thirds of small firms (64%) believe the government should also prioritise net zero, but just 25% expect to have successfully transitioned to net zero by 2050. A number of obstacles were cited by respondents, with lack of capital (38%) and slow return on investment (33%) topping the list. Only 13% of those in the study said they had appropriate finances, while concerns relating to a lack of skills and knowledge were also high.
‘The incredible inventiveness and entrepreneurialism among the small business community will be a powerful tool when it comes to cutting carbon, growing the green economy, and hitting the country’s net zero targets – if small businesses are given the tools and support they need to thrive,’ said Tina McKenzie, FSB’s Policy Chair.
‘Many small firms still bear deep scars from the energy price crisis, which saw their energy bills rocket by three-, four-, or five-fold – or even more,’ she continued. ‘Having seen too many of their peers not make it through the crisis, it’s not surprising that they are looking for ways to become more energy-independent.’
The FSB has the following policy recommendations to help small businesses:
*Small firms across the country should be given access to a game-changing scheme, the Business Energy Advice Service, which offers tailored support including free energy assessments and match-funded grants for improvements such as solar panels, better insulation, heat pumps and improved refrigeration. This has been successfully piloted in the West Midlands and should now be rolled out nationally.
*Future solar panel grant support offered by the Government should be available to commercial properties as well as domestic properties.
*The current VAT zero rate for installing energy-saving materials should include commercial premises, and the VAT on electric vehicle charging – currently five per cent for private homes, but 20 per cent for public facilities – should be equalised at five per cent.
*To make it easier for tenants and landlords to reach agreements about how to make sustainable upgrades to rented properties, the Department for Energy Security and Net Zero and the Department for Housing, Communities and Local Government should set up a joint taskforce.
‘A standardised carbon accounting framework promoted by the Government would simplify compliance for small firms, as would providing carbon accounting information on business consumers’ energy bills,’ McKenzie continued. ‘There are solutions to help small firms cut carbon and cut costs, from zero emission vehicles to energy efficiency to ensuring small businesses have the know-how and the right support to future-proof their operations and bolster their margins at the same time.
‘The world is changing rapidly, and the Government and the economy as a whole cannot afford for the UK’s 5.5 million small firms to be left behind, excluded, or bogged down by changes to policy and regulation,’ she continued. ‘Smart thinking about how to make net zero practical and affordable for small firms will unlock economic growth along with lower emissions, so will be more than worth the effort.’
Image: krakenimages / Unsplash
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