6 in 10 UK SMEs believe net-zero and the green recovery is good for business

Representatives from more than 500 businesses were surveyed

Conducted by Opinium on behalf of think tank the Entrepreneurs Network and the Enterprise Trust, the survey polled businesses in major sectors including retail, consultancy and manufacturing. Respondents from start-ups and scale-ups working specifically on green R&D in fields like electric vehicle batteries and agri-tech were also represented.

When asked whether the transition to a green economy would be positive or negative for their business in terms of financials, 61% were optimistic and just 8% said the overall impact would likely be negative on balance. Participants pointed to net-zero legislation, the ongoing ‘war on plastics’ and climate activism movements and the green recovery movement as drivers of the transition.

More than half (54%) of the respondents said they had taken steps to make their business more environmentally friendly in the past 18 months, with most of this cohort citing increased expectations from consumers, staff and those applying for jobs.

But the survey also revealed that a lack of policy support is a key barrier to transforming processes and business models in the name of the environment. More than two-thirds (68%) of those surveyed said government support for SMEs seeking to align with – or go beyond – the requirements of green policy is either average or poor. Less than one-third (30%) said the government is doing a good job of helping SMEs deal with issues like climate change and biodiversity loss.

Policy recommendations

With this last finding in mind, the Entrepreneurs Network conducted additional research to inform a string of 20 policy recommendations, covering energy, air pollution and resources.

On energy, the report recommends a reform of Energy Performance Certificate (EPC) regulations to tackle emissions from the built environment and a reform of the National Planning Policy Framework (NPFF) to enable more renewable energy generation. BEIS recently amended parts of the NPFF concerning combined generation and storage, in a bid to help the sector recover from a pandemic-related dip in investment, but the call is for broader change.

Like many major green groups, the Entrepreneurs Network is also calling for stronger carbon pricing and taxing and for UK Export Finance (UKEF) to stop financing new fossil fuel projects overseas ahead of COP26. Some 96% of the £2.6bn spent by the body to support energy exports abroad between 2013 and 2018 was funnelled into fossil fuel projects, mostly in developing nations.

On air pollution, the report argues that the Treasury did not go far enough on red diesel at the 2020 Budget. It outlined plans to end subsidies for all sectors except agriculture and rail. Also raised are measures to promote electric and hydrogen buses; to scale-up the market for ‘second life’ electric vehicle batteries and to boost e-scooter use. The Government recently made e-scooter use legal in areas where targeted pilots by local authorities are taking place.

Research into plastics recycling and reuse and resource-efficient farming technologies is recommended under the resources pillar.

The Entrepreneurs Network and Enterprise Trust are also making broader calls to ensure that “a significant proportion” of public R&D spending is ring fenced for projects tackling environmental issues. This will enable the UK to “showcase British entrepreneurial talent in environmental innovation” on a global stage at COP26.

“To promote markets in sustainability, the Government must start both properly rewarding innovators, while clamping down on pollution and other forms of environmental degradation,” lead report author Eamonn Ives said. “Doing so would incentivise entrepreneurial activity in green solutions and give British entrepreneurs a head start in the global race to succeed in the growth sectors of tomorrow.”

You can read edie’s wider coverage of the green recovery movement by clicking here.

Content relating to green innovation specifically can be found here.

Sarah George