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Small businesses behind a third of the UK’s emissions, but lag in net zero fight

Small businesses behind a third of the UK’s emissions, but lag in net zero fight
Companies who do not decarbonise might risk losing contracts with big clients, the British Business Bank warned.

The UK’s small businesses are responsible for nearly a third of the country’s greenhouse gases, yet are falling behind their larger counterparts in efforts to slash emissions.

A tiny 3% of smaller businesses said that they have measured their carbon footprint at any point in the last five years and set an emissions reduction target.

The data comes from a survey by the British Business Bank a Government-backed institution which supports small and medium-sized companies.

Its chief impact officer, Shanika Amarasekara, warned that companies who sell to big businesses might start losing contracts if they do not slash emissions as larger firms are working to rid their supply chains of carbon.

“What’s going to happen in the future is that they will be part of supply chains of larger businesses that are going to be making those demands of them,” she said.

“It’s becoming a licence to operate. It is going to become the competitive differentiator for smaller businesses.”

Big business has been falling in line in recent months with a Government pledge to slash net emissions to zero in a bid to slow climate change.

Yet smaller businesses are lagging behind their larger rivals. And together they account for around half of all emissions from businesses, making it just as important that they decarbonise if the UK is to meet its targets.

“More than half of smaller businesses say they’re not ready to prioritise decarbonisation, so clearly more needs to be done,” said Catherine Lewis La Torre, the Bank’s chief executive.

Yet, she said, 11% of companies have taken loans to fund moves to net zero, while 22% said they are open to doing so.

Some businesses might even have used their Government-backed emergency Covid loans, which were administered by the Bank, to fund their net zero transition, she said.

But lenders will also need to step up to make sure more money is available for companies to slash their emissions.

“If you think about those 1.3 million businesses that would consider external finance, that has to be an opportunity for the private sector,” she said.

Whereas 94% of companies said they have taken at least one action to reduce their emissions, their efforts often did not go far and could simply be installing a smart meter.

Among those who took action, 51% said they did so because it made financial sense.

The Bank found that 52% of smaller businesses in the UK are in what it called “carbon complacent” or “carbon exposed” categories.

It means these companies have attitudes to the climate that simply react to what is happening around them, or are simply disengaged towards cutting emissions.