What Does the Government’s Net Zero Target Mean for SMEs?

Does the UK Government’s Net Zero target for 2050 (2045 in Scotland) seem too far off to be of concern to your SMEs? Regardless of the disruption caused by the unprecedented heatwave that hit our shores earlier this month, the push for carbon neutrality could affect your small business sooner than you think.

In this article, we will show you how air pollution can affect your company. We’ll also show you the support available to support your small business if you want to take it a step further when it comes to thinking about your products and creating your green credentials.

Government Wants Net Zero – What Does It Mean for SMEs?

In October 2021 the UK Government launched the Net Zero Strategy. These are his plans to reduce greenhouse gas emissions and reduce all sectors of the UK economy including transport, manufacturing, energy and agriculture. We hope that the UK will take a leading role in meeting the ambition of limiting global warming to 1.5°C.

In 2020, businesses produced 18% of the UK’s greenhouse gas emissions. More than 40 of the UK’s FTSE 100 companies have already signed up to The United Nations Race to Zero campaign, strengthening the UK’s role as a leading international trade organization in greening and tackling climate change. But what about UK SMEs?

The UK has around 6 million small businesses which make up around 99% of all UK businesses. They employ 60% of the UK workforce and generate £2.2 trillion in economic activity. Could your company be one of these companies? It is clear that SMEs will play a key role in the UK hitting the Net Zero target. It will be important for SMEs to take steps to reduce their emissions.

So what could driving to Net Zero mean for your small business? We have already seen the ban on fossil fuel cars that is expected to hit car manufacturers in 2030. In theory, other regulations will come into force if it does not appear that the world is moving quickly towards its essential transport.

Also the pressure to control the lack of control when it comes to the environment can be a problem in some areas of SMEs. For example, speaking in Parliament in November 2020, MP for Thirsk & Malton, Kevin Hollinrake expressed concern that supporting businesses in the future “could be incompatible with environmental objectives.” He said, “I see how, in the future, banks will look at the business and say, “The business will not have our fixed and fixed goals. Therefore, it is probably not a business we want to support. ” Limiting lending is only one aspect of the economy.

Will a Carbon Plan Be Necessary for Business Insurance?

Representatives of the Net Zero Insurance Alliance (NZIA) spoke at a panel of experts at a recent meeting of the insurance industry. NZIA is a group of over 20 leading global insurers committed to changing their portfolios to reduce greenhouse gas (GHG) emissions by 2050. Consider underwriters requesting documents from SMEs explaining how they calculate their emissions and mitigation strategies. He appealed to brokers to encourage their clients to start analyzing and trying to reduce their environmental impact (if they are not already doing so).

Whether those running a company are keen on Green issues, having a carbon reduction plan can help businesses thrive if Government regulations come into effect. Recently there is a real expectation that leading insurers will make zero-preparation a part of their underwriting process. They may refuse to insure businesses without sufficient evidence that climate impacts are being adequately prioritized.

Where Do You Start If Your SME Is Suffering From Net Zero?

Is your small business not ready for Net Zero? Not sure where to start when it comes to Carbon Footprints? Fear not, you are not alone in this situation and you still have time to move forward. A YouGov survey of more than 1,000 UK SMEs in early 2022 found that almost 50% of respondents did not know the meaning of the term “net-zero.” 77% were also unsure or had no plans to reduce carbon emissions in the next three years.

More than 5.5 million SMEs operate in the UK. Research has shown that more than 4 million of these businesses may not have emission reduction targets. Only about one-in-ten had calculated the amount of their breath. A lack of in-house environmental experts, lack of funding and lack of time were cited by a quarter of respondents as factors that kept their businesses from taking action.

The The Office for National Statistics’ (ONS) conducted the Business Insights and Conditions Survey (BICS) between June and October 2021. More than half of the manufacturing, real estate, accommodation and food service, and education industries reported taking at least one step to reduce their emissions. Yet more than a quarter of businesses in the construction and manufacturing industries reported not taking action.

What Does Net Zero Really Mean?

As mentioned above, some SMEs are not sure what Net Zero means? So what is Net Zero? In short it is The Governex Groupnet zero carbon (or carbon neutrality) means either:

A. Carbon neutrality – i.e. obtaining 100% of energy needs from renewable/carbon-free energy sources;
or…
B. Removing from the atmosphere an equal amount of carbon produced by activities, services, products, etc. – for example planting enough trees to reduce the same amount of carbon.

Where Can SMEs Find More About Achieving Net Zero?

Towards the end of 2021, the CDP Climate Disclosure Program (CDP) and the SME Climate Hub launched a new initiative to support SMEs. These resources will help small businesses in particular to measure, report and reduce their climate impact. Its aim is to overcome the various barriers to decarbonisation that are presented by SMEs such as the lack of technology.

The tool is called SME Climate Disclosure Framework and help SMEs in all sectors measure and report their direct, energy-related and indirect emissions. Definitions of critical emissions and climate terms are provided. In addition, there is a systematic recommendation for reducing greenhouse gas emissions in line with climate science, based on the size and sector of SMEs.

Small businesses are also being offered access to major UK businesses such as, NatWest, Google, Scottish Power and BT. Their meteorologist will be given the opportunity to take action to benefit the planet.

We hope that every small business in the UK will start taking small steps to reduce their emissions as part of the UK’s journey to zero by 2050. These actions can be as simple as changing to energy saving light bulbs, switching to electric cars . and other ways to clean transport to reduce their carbon footprint, to introduce work methods for workers, to move to environmentally friendly places etc.

The UK Business Climate Hub has information on small businesses.

How Can SMEs Assess Environmental Impacts?

A proactive approach to zero-sum goals is essential to transforming your business. The online resources above can outline the steps required to achieve zero net worth for SMEs. However, you may feel that your company could benefit from the addition of a professional.

Many ESG advisory businesses are emerging. They can help advise businesses on carbon reduction and corporate governance. Net zero can be seen in achieving business goals, strategies, integrity and diversity? So questions about how your SME can contribute to environmental and social issues need to be answered?

A number of businesses are seeking external accreditation for their environmental initiatives. Organizations like Results B Corp you can verify your net zero program. This not only gives you confidence that your work in this area is working. B Corp Certification is “certification that a business meets high standards of performance assurance, accountability, and transparency for reasons based on employee benefits and charitable contributions on products and equipment.” Their approval can also be a good selling point for both employees and customers who need reliable business.

Future Proofing While Growing a Low Carbon Business

Given the business challenges faced by UK SMEs, achieving Net Zero immediately would be costly and burdensome for many. There will be more that most SMEs are willing and able to do at this point. More government funding could also be provided if other laws are enacted to help reduce emissions. Focusing on quick wins may be your chosen strategy here and now. New solutions may appear over time. Hopefully, with an open mind to these developments, the major problems that exist can be solved in the future.

However, moving to Net Zero should not be seen as a setback for your SME. It can have more positive effects than just benefiting the environment. In the run-up to the UN Climate Summit COP26 in Glasgow last November campaigners urged small businesses to pledge to reduce their emissions by 2050 or sooner. He mentioned the business opportunities that will come to many companies when they make changes ahead of their competitors. Big green signs can help your company grow and gain opportunities.

Plans are delighted to have recently been shortlisted in the upcoming UK Broker Awards in a number of categories, including Best Broker for Sustainability and Commercial Lines Broker of the Year. We are in the right place if your business wants to cover risks related to sustainability and electric vehicles.

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