Sage : How can small businesses achieve net zero emissions?

The net zero carbon lens may focus more sharply on Fortune 500-size companies.

But with small businesses accounting for 99.9% of the UK business population, collectively their actions are just as important for combating climate change.

Yet, only 9% of small businesses, and 5% of microbusinesses, are measuring their carbon footprint, according to a recent survey of around 1,000 companies by the British Chambers of Commerce.

Smaller firms tend to have limited access to capital and fewer resources, meaning decarbonisation can seem overwhelming.

But getting ahead of the curve can keep small business owners competitive and resilient against incoming climate legislation, while also reducing costs and attracting new customers.

Chris Rowlinson, director at One+All, a clothes manufacturing company that is certified carbon neutral by the Carbon Neutral global standard, testifies to this. He says that once his company got started on their decarbonisation journey, they discovered it was not only rewarding but also cost-effective.

'Once we cracked on with it we found it quite contagious, and without exception, there's almost always, if not always, financial benefits to the changes,' he says.

'I think that is what many companies fail to realise straightaway.'

In this article, we explore how your small business can support government legislation to reduce carbon emissions to net zero by 2050.

Here's what we cover:

The net zero emissions goal

1. Calculate the company's carbon footprint

2. Create a strategy and stick to it

3. Bring staff along for the journey

4. Offset stubborn emissions

Final thoughts: Learn from others

The net zero emissions goal

In 2019, the UK government amended the Climate Change Act to introduce a target for at least a 100% reduction of greenhouse gas emissions by 2050, compared to 1990 levels. Earlier in 2021, in its sixth Carbon Budget, it set into law another target to reduce emissions by 78% by 2035, compared to 1990 levels. This legislation underpins the country's climate change commitments.

In line with these targets, companies with more than 250 employees are legally required to report their emissions under the Streamlined Energy and Carbon Reporting policy. While this means small businesses are largely exempt from mandatory reporting, the increasing urgency to combat climate change could see policy change fast and eventually reach small businesses.

In fact, many are likely to be indirectly impacted by climate reporting legislation sooner rather than later.

The Federation for Small Businesses (FSB) expects the decarbonisation efforts of bigger companies to put increasing pressure on their supply chain - which includes small businesses - to reduce their carbon footprint as they look to minimise their scope three emissions impact.

Scope 1, 2 and 3 reporting is from the Green House Gas protocol and was created by the World Business Council for Sustainable Development for companies to understand reporting categories. Scope 3 covers emissions not directly generated by a business but associated with it, i.e in the supply chain.

In May 2021, the Department for Business, Energy & Industrial Strategy (BEIS) launched a new campaign, called Together for Our Planet, urging small businesses to cut their greenhouse gas (GHG) emissions in half by 2030 and to achieve net zero by 2050, starting with small practical steps.

The prospect of decarbonisation might seem overwhelming, but there are a few simple steps you can take now to get going…

1. Calculate the company's carbon footprint

If you want to lower your emissions, the first thing you should do is calculate them.

Several good tools to do this are available in the UK SME Climate Emissions Hub. It provides links to accounting and reporting mechanisms, such as the Greenhouse Gas Protocol, which is the world's most widely used emissions accounting standard.

It also provides handy guides on emission scopes one to three. After 18 months, through the government hub, entrepreneurs can complete a simplified impact report to track their progress. This helps identify any climate risks, as well as how to mitigate them.

2. Create a strategy and stick to it

Once operational emissions have been calculated, the next step is to create a strategy outlining how to work towards lowering and eventually eliminating these emissions.

Set an emissions baseline to provide a point against which you measure any changes in the amount of emissions produced by a project in a reporting period.

Milestones could be as simple as installing energy-saving light bulbs or switching cars and machinery from diesel to electric.

Don't forget to check if there are government subsidies and support mechanisms available to help with the cost of the change. Start implementing the goals one at a time and regularly monitor progress to maintain momentum.

3. Bring staff along for the journey

If you have employees, then informing and educating them about your company's ambitions will enhance the journey and should make the transition smoother.

Your employees may also be required to implement certain changes or may benefit from them, such as creating a new cycle to work or car-sharing scheme. They could even communicate the company's ambitions to customers as part of a new marketing strategy.

4. Offset stubborn emissions

Consider offsetting the emissions that are hard or impossible to abate.

This means paying for sequestration of carbon - such as tree planting - somewhere else.

The Carbon Offset Guide helps brands to understand how this works and how to get started.

Final thoughts: Learn from others

Many small businesses have already started their net zero journey and can offer valuable advice.

Joseph Vaughn, the founder of skincare company JAL Skin, made a commitment for the company to be carbon negative by 2030.

He started by calculating his emissions with a company called EcoCart and made several operational business decisions inline with the company's goal, such as to manufacture in the UK, use delivery services that are powered by biofuel, and to pay to offset emissions.

'I recommend looking at your business and setting some targets; look at the different options available to you, the logistics of your company and how you produce products and how far they travel,' says Vaughn.

'The hardest thing is keeping on top of the targets, 2030 seems a while away, but it's important to keep raising the bar year-on-year.'

Similarly, premium gin brand Silent Pool has made operational decisions to meet its sustainability ambitions.

It uses organic waste to generate electricity, reuses packaging where possible, offers a bottle refill option to customers and, among other things, contributes financially to the upkeep of the local countryside.

Tom Hutching, head of technical operations says: 'It costs a bit more, but it is very important to us to make these changes. We hope to do more in the coming years.'

Sustainability Hub

Explore how your small business can create a robust sustainability strategy, save money, and attract more customers by visiting the Sustainability Hub.

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