Three-quarters of UK SMEs do not have net-zero targets in place

There are more than 5.5 million SMEs operating in the UK

Lloyds Bank Business has released the findings of YouGov survey of more than 1,000 UK SMEs at the start of the year. Business leaders and decision makers were questioned on approaches to carbon reduction and net-zero.

The survey found that around 50% of respondents did not know what was meant by the term “net-zero”, and that 77% were unsure or did not have strategies in place to reduce carbon emissions over the next three years.

Just 12% of respondents had calculated their carbon footprint and many noted the key barriers that were hindering better understanding and action on the subject. More than one-third cited a lack of knowledge, while finance and time were cited by 25% of respondents respectively.

With more than 5.5 million SMEs operating in the UK, the research suggests that more than 4 million businesses nationwide may not have ambitious carbon targets in place.

Lloyds Bank’s commercial director of business banking Adam Rainey said: “While our nation’s small businesses recognise the importance of tackling climate change, there are real issues with understanding how to get there – including calculating carbon emissions and even the meaning of net-zero.

“Fortunately, there’s a whole host of support available to help businesses make their first steps in becoming greener, from getting started with electric vehicles, practical guides to help reach net zero and tools to calculate potential energy savings at business premises. We know it can seem daunting but some really simple things, such as reducing travel and recycling, are also great places to start.”

A recent report from the British Business Bank, which polled 1,200 decision-makers at SMEs on their approach to reducing emissions, found that 76% are yet to implement comprehensive decarbonisation strategies. Barriers include a lack of in-house environmental expertise and limited finance.

Late last year, CDP and the SME Climate Hub launched a new framework to help SMEs measure, report and reduce their climate impacts, amid growing concerns that they are facing numerous decarbonisation barriers that do not impact large firms as much.

The tool is called the SME Climate Disclosure Framework and will help SMEs in all sectors to measure and report their own direct (Scope 1), power-related (Scope 2) and indirect (Scope 3) emissions. Also included in the tool are the definitions for more complex emissions and climate terminology, plus tailored advice for reducing emissions in line with climate science, taking into account SMEs’ size and sector.

The Exponential Roadmap Initiative and Normative contributed to the development of the tool, alongside CDP and the SME Climate Hub.