Net zero is a priority for many governments across the globe. Being net zero means adding no more greenhouse gases to the atmosphere than the amount you’re taking out. In the UK, the government wants the economy to meet net zero targets by 2050. Its net zero strategy sets policies and proposals for decarbonising all sectors of the UK economy.
Net zero strategies aim to slow down and limit global warming, which is contributing towards climate change and causing shifts in temperatures and weather patterns.
And in the UK, for example, small- and medium-sized enterprises account for 99.9% of the private sector business population (5.6 million businesses) which means that to achieve the net zero target, SMEs need to be fully onboard.
Worldwide, SMEs represent about 90% of businesses and more than 50% of employment. Governments across the globe need to make sure that SMEs know how to reduce their carbon output and encourage participation.
It may seem a daunting prospect, but it perhaps doesn’t need to be, as laid out by our three experts. If SMEs can break down what they need to do and address it in bitesize chunks, then the task doesn’t seem as overwhelming as once thought. And with consumers choosing businesses which have green credentials, it is not only good for the planet, but also good for business.
There are many resources online to help companies start or continue their net zero journey. One website, zerocarbonbusiness.uk, takes readers through the process in a step-by-step guide. Immediate steps it suggests are to monitor your energy usage, install a smart meter, switch off a default energy tariff and shop around, set your heat lower and avoid overcooling. These are just a handful of suggestions but there are many more options to consider.
The SME Climate Hub is a non-profit global initiative that empowers SMEs to take climate action and build resilient businesses for the future. SMEs are invited to commit to the pledge to act by completing the commitment to halve emissions by 2030, achieve net zero by 2050 and report on their progress yearly. The hub offers free tools and resources to take action.
So, although it may seem like a mammoth task, there is lots of help out there. Find out more from our three experts on the following pages about how you can achieve net zero.
John Barber, VP and Head of Europe at Infosys Finacle:
As an entrepreneur leading a fledgling business, sustainability can pose many questions: Is this the right time for me to think of it? Do I need to go all out on sustainability at this stage? Or will it be a distraction from my growth agenda right now?
As a financial technology practitioner whose day job is to help organisations unlock growth, I can be unequivocally clear: bringing sustainability to your business is one of the best ways to unlock growth.
I recommend five ways in which businesses of any size can move definitively towards profitable growth and sustainable, net zero emissions simultaneously:
Energy: choose wisely, use wisely
Opting for renewable energy sources, like wind or solar, and frugal energy use through efficient lighting, heating and cooling can drive bothlower emissions and higher savings. For instance, Deutsche Bank has implemented energy efficient systems and efficient water usage practices in its buildings as a method to be more sustainable, while also cutting down on energy costs.
For e-commerce and digital-native businesses, migrating your workload to cloud can be a powerful way to reduce emissions.
Operations: go paperless
In 2020, TransferWise, a UK-based online money transfer service, announced that it had achieved near-paperless operations, with 99% of its transactions being processed digitally. This paperless approach also reduced energy consumption, emissions and waste, while improving its overall operational efficiency. By embracing digital operations, your organisation can not only benefit from cost savings and reduced emissions, but also harness data analytics and serve your customers better.
Offices and travel: virtual is the new reality
The pandemic accelerated the adoption of virtual working environments and in many cases, eliminated the need to be in a physical office. Experts have also warned that the daily commute to and from work can be a large source of emissions. Furthermore, the travel involved in meeting customers near and far, can create significant emissions as well.
Equipment replacement cycles: SaaS can make it last
Software provided in a Software-as-a-Service (SaaS) format is hosted and managed on cloud by the vendor, allowing your organisation’s users to access the latest software online, even on older/ lower hardware specifications. SaaS eliminates the need for your business to invest in frequent and expensive hardware upgrades that are also detrimental to the environment.
Partners: go green and clean
A large part of your business’s emission footprint could come from your value chain, rather than your own business. To mitigate the emission impact of your value chain, choose partners who are greener and cleaner in their operations. By pursuing these five approaches, your business can make significant strides towards sustainable growth, leaving no footprints behind.
Elisa Moscolin, EVP of Sustainability & Society, Sage:
In the UK, the government has announced the world’s most ambitious national climate change target in law, aiming to reduce emissions by 78% by 2030. That will be no small feat and requires a worldwide commitment to achieve it. Currently, small- and medium-sized enterprises (SMEs) generate 44% of the UK’s non-household greenhouse gas emissions. While research shows that they want to be greener, 90% feel restrained by cash flow obstacles and difficulty finding the right solutions to improve their environmental impact – so how can SMEs meet their targets?
Take small first steps, like considering efficiency
Energy efficiency is often the first and easiest action SMEs can take towards progress on net zero targets. This might mean something as simple as ensuring all lighting uses the most efficient bulbs available, or as significant as installing rooftop solar panels and heat pumps in place of gas boilers.
Engage your staff
A recent poll by ACCA Global found that more than 80% of its members said it was important or very important for their organisation to operate in an environmentally friendly and sustainable way. SMEs should ensure they are building net zero targets into their business plan, clearly communicate this to employees and ensure they receive appropriate training to take action. This includes, understanding what support they might need to manage the administrative burden of sustainability reporting, providing training on how they can both improve the efficiency of the business and making data more accessible.
Start measuring your impact
SMEs are under increased pressure to measure their carbon footprint to access supply chains as well as capital. Although the overall goal may be overwhelming, setting incremental goals to hold your business accountable is a great way to ensure targets are being met. For example, the SME Climate Hub, a non-profit global initiative, provides guidance on how small businesses can set net zero targets, measure their emissions and develop climate strategies.
Because carbon emissions are set to come under greater regulatory pressure, measuring them now is also important to make your business fit for the future.
Forget the jargon; think about resilience
The net zero agenda is a jungle of hard to pronounce acronyms that spring up like mushrooms. Forget about the acronyms and labels and instead, focus on resilience. Think about the risks and opportunities that your business is exposed to. If you are in the transport industry, you are probably already thinking about the impacts of the ban on diesel vehicles. If you are in the food and beverage, disruption in supply chains and changes in consumers preferences will hardly be something you have never thought about.
Emily Faint, Net Zero Policy Manager, BSI:
Accounting for 99% of UK businesses, SMEs form the critical mass of companies that can accelerate change and shape the economy’s net zero transition. Research we commissioned last year found that only 21% of SMEs were fully aware of the concept of net zero targets. However, a further 37% were beginning to explore what this means, indicating an opportunity to turn ambition into action.
The ISO Net Zero Guidelines were developed to provide organisations with a comprehensive overview of credible net zero action and bring clarity to what to consider in practice, supporting them to reduce their risk of greenwashing. To help SMEs that are just getting started, the net zero journey can be broken down into six steps:
- See where you stand
Measure your organisation’s emissions, ensuring you account for all greenhouse gases and all three scopes of emissions. Scope 1 covers direct emissions, the second covers those that come indirectly from the generation of purchased electricity, steam, heating and cooling, and the third includes other indirect emissions that occur in an organisation’s value chain.
- Set a science-based target
Once you have a clearer understanding of how much you must reduce by, and by when, it can be helpful to include interim targets – at least every five years – to help your organisation stay on track and implement necessary measures.
- Publicly commit
Make a simple, public commitment to cut emissions in line with your target and share your progress. You can also map out key roles and responsibilities in your organisation for collaborating to deliver on this commitment. UK companies can sign up with the SME Climate Hub.
- Take action
Reducing your company’s emissions is the most important step you can take on your net zero journey. Among the practical actions SMEs are taking are:
- Collaborating with your suppliers
- Minimising waste from your products and packaging
- Installing a smart meter to reduce energy usage
- Adjusting heating and cooling system timings, temperatures and rooms
- Installing renewable energy electricity or heating
For residual emissions (approx. 5-10% of your remaining emissions that are difficult to reduce), organisations can purchase high-quality credits for removal-based offsets. These offsets remove emissions from the atmosphere and store them.
- Report your emissions
It is helpful to share progress transparently and on an annual basis, reporting emissions reductions separately from any offsets purchased. This should also be captured in your annual report.
- Verify your reporting
For accuracy and transparency and to reduce risk of greenwashing, make sure that the data you report is verified by a third-party. The Carbon Disclosure Project sets out the verification standards it accepts for verified emissions data in reporting.