Small UK companies ill-prepared for net zero, business leaders warn

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Business leaders have called on ministers to give clear advice to small companies on cutting their emissions after a survey showed that only one in 10 understood what the UK’s 2050 net zero target meant for them in practice.

The British Chambers of Commerce urged the government to demonstrate “commitment and consistency” and end the “fog of conflicting information” in its approach to their climate targets following the findings of the survey conducted together with Lloyds Bank.

The lobby group also said large companies and institutions should take more responsibility for driving behavioural change through their supply chains. 

The survey of more than 1,000 companies found that only 8 per cent said they “comprehensively understood” the implications of the net zero target for their business. In contrast, 14 per cent said they did not know anything about it at all. 

Theresa May’s Conservative government introduced legislation in 2019 that made it legally binding for the UK to achieve its net zero carbon emissions by 2050 as part of the global effort to minimise the impact of climate change.

It has become politically contentious in recent months with some rightwing Tory MPs pushing prime minister Rishi Sunak to ease off the target in order to avoid potential extra costs on consumers during a cost of living crisis.

The survey found that awareness of the net zero target was lower among the smallest companies with fewer than 50 staff. Only 19 per cent of the smaller companies had developed a plan for reaching the target, compared with 36 per cent of larger ones.

Overall, 60 per cent of those surveyed said they either had no intention of reaching net zero, did not believe it was possible for their organisation or did not know what it would involve.

“All the businesses we spoke to understand the devastating impact climate change is having on our planet, and that sitting this out is not an option,” said Shevaun Haviland, director-general of the BCC.

“But many smaller firms feel lost in a fog of conflicting information and are reluctant to invest in new technologies when they fear betting on the wrong horse.”

“Mixed messages from government on the importance of net zero are only compounding the problem, as well as a ‘stick’ heavy approach to enforcing change,” she added.

Larger companies, particularly those with stock market listings, have faced growing demands from investors to disclose the impact of climate change on their businesses and how they plan to adapt. The effect on smaller enterprises has so far been more limited, according to corporate advisers. 

Early efforts towards hitting the 2050 target have largely focused on increasing the amount of renewable energy in the UK’s generation mix. But to reach the target in the coming years the government needs to tackle the bigger challenges of decarbonising Britain’s transport system and shifting domestic heating away from gas boilers.

Twenty-one per cent of companies surveyed by the BCC thought green technology would decrease their productivity while just 10 per cent thought it would boost it.

The report found specific barriers to small companies taking action to cut emissions: for example not enough EV charging points, supply chain problems and landlords refusing permission for tenants to put up solar panels.

However, the survey did find widespread use of technologies such as LED lighting, solar panels, recycling and renewable energy providers. For example, 34 per cent said they were investing in greener vehicles.

Haviland said other countries and trading blocs were pouring billions of pounds into low-carbon technology, posing a risk that the UK could be left behind.