From Pledging to Implementing: Third of small businesses have formal Net Zero plan in place

Wednesday 9th November 2022

Together for Implementation: With COP27 this week bringing world leaders together to accelerate global efforts to confront the climate crisis, there is a major focus this year on translating pledges into concerted action and effective plans for implementation. New UK research suggests small businesses are already well into the journey of translating words into action.

Since the 2021 Glasgow COP26 conference when world leaders committed to tackling the climate crisis; the Russian invasion of Ukraine, the global energy crisis, and political upheavals have delayed implantation on climate action. Novuna Business Finance has surveyed more than 1,000 small businesses to better understand their drive for sustainability - from pledging to implementing amidst a year of global economic uncertainly.

COP26 set out targets for governments across the world to monitor and reduce carbon emissions by the year 2050, in a bid to keep global temperatures below 1.5 degrees of warming. Already, 31% of UK small businesses are in step with this target and are actively looking to reduce carbon emissions.

  • Pledging: At the start of this year, small businesses acknowledged the areas of sustainability that were of greater importance to them now, in 2022, than was the case in 2021. This year, small businesses have been setting out to: review energy usage, considering renewable alternatives (26%); assess how they can have a positive social impact on their immediate community (22%), and switch to greener forms of transport (20%). In addition, many enterprises have been actively contributing to local green initiatives - such as litter picking and community green energy projects (18%).

  • Net Zero: Reaching Net Zero is high on the agenda for UK small businesses with nine in ten (89%) having told Novuna Busines Finance that they are working towards Net Zero operations.

  • Implementing: Of those working towards Net Zero, 13% of small businesses in the UK have said they believe their business is already operating at Net Zero and 31% have a formal Net Zero plan in place that they are working on. In addition, 45% of enterprises don't yet have a specific plan but are taking positive steps towards carbon reduction.

  • Green agenda: The vast majority (85%) of businesses are finding creative ways to put sustainability higher up the agenda, with some of the top initiatives including: looking for greener ways to do things (27%), 21% having a staff suggestion box, 17% discussing green issues in senior management meetings and 16% have invested in green initiatives for staff (such as bike sheds, working from home etc).

Whilst good progress has been made this year, for around one in four small businesses this year’s economic challenges threaten to slow down progress going into 2023. Just under one in four small business owners (23%) said they struggle to balance climate issues with the prevailing economic pressures they face – and for 21% of respondents the main priority is now to simply keeping the business afloat. With rising cost of living and economic uncertainty, financial limitations have been cited as a significant barrier to making further progress on sustainability – with 24% of respondents saying they no longer have the budget.

There is a clear and strong willingness from small businesses to do more in the fight against climate change. Many have put sustainability higher up the agenda and are looking for genuine ways to make authentic changes to their business and to positively impact the broader community.

COP27 will be a historical event and an unmissable opportunity for us all to come together as one united people in the battle against climate change. If we can truly and collectively harness this spirit of urgency then it is without doubt that things will change, and fast. The economic distractions of today must be surpassed in order that we can unleash the energy of small businesses, who are playing a bigger role than many have given them credit for in the fight for our planet.

Jo Morris

Head of Insight

Novuna Business Finance

What a Small Business Bill for COP27 might look like:

  • A stable economy where small businesses can thrive and grow
  • Government initiatives to help subsidise sustainable development i.e., to afford the move to renewable energy (solar panelling)
  • Reduced business rates and affordability of utilities, lifting this burden will enable small business to focus more energy and resources onto sustainability
  • More emphasis being put on the need to move towards the green agenda from governments and local authorities, to ignite and reinforce the change.

What small businesses are doing to put green issues higher up the agenda

We look for alternative green ways to do things

27%

We have a staff suggestions box

21%

Green issues get discussed at senior management level

17%

Green incentives for staff (bike shares, WFH etc)

16%

Educating staff on the urgency of the matter, creating excitement

15%

We audit our own carbon footprint

14%

We give staff members time off work for green initiatives

12%

We support environmental projects as part of our CSR

11%

We actively look for different partners

11%

We have set up a green council

10%

We lobby local government

9%

We lead the sector on changing green issues for the best

9%

We have appointed a sustainability officer/director

8%

Where the urgent need to achieve carbon neutrality starts

Individuals within a business need to be educated and taking action both at work and at home

27%

Societies big influencers (government/big businesses) should lead change

27%

As a business we can drive change, and influence the behaviour of others

23%

My supply chain and customers need to set the pace which we will keep up with

15%

Not applicable - I do not think there is an urgent need to achieve carbon neutrality

8%

Sustainability projects that small businesses are working on

Improve sustainable profitability of the business

36%

Invest in staff education / training

30%

Cut down on waste and packaging

27%

Invest in staff wellbeing

22%

Reduce carbon footprint

21%

Do more recycling

21%

Work towards consistent values in our supply chain

13%

Invest in electric cars/ fleet vehicles/solar energy

11%

Greater use of solar / renewable energy

11%

Review risk management policies

11%

Avoid associating with political or cultural issues that may offend or alienate people

8%

Invest in supporting community projects

7%

Independent reviews of our compliance procedures

5%

Governance (i.e. work to align the interests of community staff and shareholders)

5%

Develop a DEI policy (diversity, equality & inclusion)

4%

Greater support for working parents and carers

4%

Enhance our maternity/ paternity polices

2%

Notes to Editors

The research was conducted by Maru Blue among a representative sample of 1,027 small business owners.