How Can SMEs Contribute to Net Zero?: An Evidence Review.

Blundel, Richard and Hampton, Sam (2021). How Can SMEs Contribute to Net Zero?: An Evidence Review. State of the Art Reviews 51; In State of the Art Review series Enterprise Research Centre, Warwick.



In 2019, the UK Government and the devolved administrations committed to achieving the target of Net Zero by 2050, based on the recommendations of the UK’s formal advisory body (Committee on Climate Change, 2020). It is now widely recognised that this will require major reductions in the carbon emissions of the general SME population. There are more than 5.9 million small and medium-sized enterprises in the four nations, which employ 16.8 million people and account for an estimated £2.3 trillion in turnover (approximately 52% of the total for UK private sector businesses) (BEIS, 2020). While the environmental footprints of individual firms may appear relatively insignificant, it is not possible to ignore the aggregate impact of such a large component of our economic landscape. SMEs can also have an important indirect influence on climate mitigation through their influence on other actors, including suppliers, customers, and other organisations (Parag and Janda, 2014). There has been a step-change in public and private sector involvement in this area in the last few years, signalled by the launch of many new local, regional, and sectoral initiatives. However, it is not clear whether the current policy mix will be sufficient to meet the sheer scale and complexity of the challenge. While this report focuses on Net Zero, much of evidence presented is equally applicable to other important environmental issues, such as waste management and air quality. We begin with a brief review of recent policy developments. This is followed by an overview of the more promising types of tools andapproaches, with practical examples and indicative sources. We examine explanations for the failure or under-performance of these interventions, which are often analysed in terms of discrete ‘barriers’ and ‘drivers’, and indicate why it has become necessary to move beyond this conventional framing. We then map out six key evidence gaps in relation to: data; support; intermediaries; values; COVID-19; and networks, along with two cross-cutting research priorities, which need to be addressed in order to ensure more effective policy design and implementation in this field. This review addresses environmental improvement in the general SME population. A companion review will focus on the closely related challenge of promoting ‘green’ start-up ventures and other forms of eco-innovation in sectors that seek to address specific environmental challenges.

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