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Hampton, Sam; Will, Eadson; Richard, Blundel and Katherine, Sugar (2024). Where Next for SMEs and Net Zero? UK Energy Research Centre, London, UK.
DOI: https://doi.org/10.5286/UKERC.EDC.000976
Abstract
Governance for SMEs and Net Zero
Small and Medium-sized Enterprises (SMEs) are pivotal in the global effort to combat climate change. Despite contributing 13% of global carbon emissions and consuming 50% of commercial and industrial energy, SMEs often trail behind larger organisations in their climate action initiatives. This lag is due to exemptions from many energy and climate policies and challenges in accessing relevant, reliable information. The GoZero project delves into the role of SMEs in climate action, identifying emerging trends and setting forth a comprehensive policy and research agenda.
The governance challenge
SMEs are at a critical juncture in their decarbonisation journey. Recent geopolitical events, such as Russia’s invasion of Ukraine, have exacerbated the energy price crisis, placing energy concerns at the forefront of SME agendas. SMEs are particularly vulnerable to energy price fluctuations and supply chain disruptions, which can lead to increased insolvencies and economic instability.
Historically, SMEs have been excluded from stringent energy and climate regulations due to their smaller carbon footprints and limited resources. This exclusion means they often miss out on the benefits of regulatory compliance, such as access to energy-saving initiatives. Local, incentive-based policies have provided some support, but these initiatives are typically small-scale, inconsistently evaluated, and lead to a fragmented support landscape across the UK. Research indicates that the uptake of these support initiatives is low, with less than 1% of SMEs benefiting from support. Common investments include subsidies for LED lighting and solar photovoltaics.
Renewed attention and emerging support
Despite these challenges, there is a growing focus on SMEs and Net Zero from various stakeholders, including government bodies, financial institutions, sector associations, and sustainability consultancies. Initiatives such as the UK Business Climate Hub are working to centralise and simplify support mechanisms for SMEs. However, significant hurdles remain, including the need for broader dissemination of sustainability information, overcoming financial barriers, and ensuring equitable access to support initiatives.
Plain Language Summary
This report examines key challenges and opportunities for Small and Medium-sized Enterprises (SMEs) in reducing their carbon emissions. It looks at the different organisations involved supporting these businesses, including government agencies and industry associations, and makes recommendations for improving the way that this is organised.
CORE (COnnecting REpositories)
CORE (COnnecting REpositories)
