As the UK works towards its target of becoming a net-zero nation by 2050, one sector will be a crucial contributor to that target, but has been largely overlooked until now: small businesses.
New NatWest research shows that SMEs can deliver half of UK carbon reductions, while there are around £160 billion in opportunities to make firms more efficient and sustainable. Yet just 6 per cent of small firms see climate action as a source of future growth.
For smaller companies, going green can seem like an expensive process. But the latest Springboard to Sustainable Recovery report shows that up to 70 per cent of low-carbon options will have a solid business case by 2030 – and some, such as switching to renewable energy and improving energy efficiency, can save money today.
Many SMEs supply larger companies that want their supply chain to decarbonise – and some will even help with the cost. If not, their own consumers increasingly want more sustainable products.
There are huge opportunities in areas such as installing heat pumps or solar panels. NatWest is committing £100 billion in funding by 2025 to support the investment the UK needs, including business investment to make the transition to net zero.
However, many SMEs do not know how to proceed, or what market demand will be for green products.
For SMEs to play their role, they need to look at six key areas:
- Awareness – be aware of the opportunities and how they apply to your business
- Knowledge – know what regulators and customers want you to do in relation to climate
- Skills – retrain employees to produce and fit new, greener products such as heat pumps
- Funding – be aware of the available funding options – some of these changes will cost money
- Market access – there must be certainty around business opportunities, backed by regulation and firm commitments from large companies
- Navigation – in a complex, rapidly evolving landscape, to identify the best options for them SMEs should seek advice from expert sources such as their bank if necessary
The UK cannot meet its targets without SMEs, but if they are to play their part fully, they need support from government and organisations such as NatWest to give them the confidence to grasp the opportunities on offer.
by Andrew Harrison, MD business banking, NatWest