Dr Sam Hampton, Acting Energy Programme Deputy Lead at the Environmental Change Institute is the lead author of a major report which highlights the key challenges and opportunities for SMEs in achieving net zero.
The report draws on evidence from a comprehensive review of policies and business support initiatives along with interviews with 83 governance stakeholders and 30 SMEs and makes recommendations for a GoZero project.
In partnership with other researchers and the UK Energy Research Centre (UKERC) this report highlights the need for stronger national frameworks and improved resources to address the unique challenges faced by SMEs across different regions. By adopting these recommendations, stakeholders can help SMEs play a crucial role in achieving net zero goals.
Dr Hampton co-authored the report with former ECI colleague Dr Katherine Sugar, Research Associate in the Governance of Net Zero, now Postdoctoral Research Fellow at the University of Manchester; Will Eadson, Professor of Urban and Regional Studies at the Centre for Regional Economic and Social Research, Sheffield Hallam University; and Richard Blundel, Professor of Enterprise and Organisation at The Open University.
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.
Future directions for SMEs and net zero
Given the energy price crisis, the increasing incidence of extreme weather, and rising public and business concern for climate action, the role of businesses in society is undergoing a fundamental transformation.
Read the announcement from UKERC and the full report.