Net Zero Hub

Net Zero Hub

Net zero and SMEs – how your business can act now

The year 2050 may seem like a long way off, but getting to net zero in the future requires action now so that you don’t fall behind.

It can seem daunting to start your net zero journey. Here are some practical measures you and your business can take now.

Measurements first

The most important step you should take before setting climate targets is to calculate your business’s current emissions.

After all, you cannot start to tackle your emissions if you don’t know what they are.

The Zero Carbon Business Tool from the Broadway Initiative is a useful tool to get this process under way.

It is designed to help SMEs measure their corporate emissions easily and taking account of non-CO2 levels.

You might want to consider where the boundaries of your business lie, accounting for operations and sites that you directly control.

The Government regularly publishes conversion factors which allow you to calculate the “carbon dioxide equivalent” (CO₂e) of different gasses.

You may also consider installing sub-meters which let you measure the energy use of different sites or processes to establish from where your greatest emissions come.

Emissions categories

Our carbon footprint is measured in categories or types known as “scopes”.

There are defined by the Greenhouse Gas Protocol, the internationally recognised standard for reporting emissions – so you should feel safe using them as a framework for your business. They are:

Scope 1: Direct emissions from facilities or equipment your business owns or controls

This covers everything from fuel burned by company vehicles, to burning gas to generate heat for manufacturing processes. Reducing Scope 1 emissions might involve replacing equipment or changing your processes.

Scope 2: Indirect emissions from energy you buy from suppliers

This “scope” refers principally to electricity which is generated off-site but used on-site. Switching to a supplier that only buys renewable energy is an easy way to decarbonise. But beware of greenwashing, which may mean care is needed to verify the Green credentials of a supplier.

Scope 3: Indirect emissions from your company’s supply chain

These are emissions linked to the activities of your business, including business travel, purchased goods and services, water and waste. As they are not directly generated by you or the energy you buy, they are known as “value chain emissions”. For most businesses, Scope 3 emissions make up the vast majority of your carbon footprint. Measuring Scope 3 emissions can be complex; the Greenhouse Gas Protocol has published technical guidance to explain the details.

Setting targets and taking action

With Scope 1 and 2, the most important thing is to set realistic but ambitious targets.

Perhaps work out what emissions reductions will be required each year to reach net zero before 2050?

Interim targets will give you the opportunity to monitor your progress and make corrections if you go off-course.

Scope 3 emissions are, in the majority of cases, the biggest obstacles to reaching net zero as they are much more difficult to eliminate.

Factoring them into your interim target-setting is vital. One approach could be to set a much more ambitious target (i.e. a target in the nearer future) for getting Scope 1 and 2 emissions to zero, leaving you room to focus solely on Scope 3.

Start with the easy wins

The quickest and cheapest way to cut your emissions is energy efficiency.

Scope 1 and 2 emissions can be tackled immediately by considering building efficiency, from building fabric measures to reducing heat and cooling loss, or even servicing and replacing boilers.

However, one consideration to factor into your planning is that there may be an impact on the value of your property, and therefore business rates liability, though that could be balanced by reduced energy bills.

It is worth you thinking carefully about whether the Government’s ‘Super Deduction’ is available.

This applies to spending on certain, but not all, assets by companies subject to corporation tax (but not all businesses, such as sole traders or partnerships).

The ‘Super Deduction’ gives additional corporation tax relief for spending on qualifying assets, and is open until March 2023.

Therefore, if it is available, now may be a good time to invest in energy efficient machinery.

If you work from a rented premises, you may not be able to make these changes. The good news is there are still measures you can take.

You can ensure energy efficiency is a criteria you consider when seeking new properties.

The Minimum Energy Efficiency Standard legislation has now become law. However, this covers a wide range of energy efficiencies, and opting for an A-rated building is clearly more environmentally friendly. This will also show in your running costs.

It may also be worth a discussion with the property’s owner or management to see if there are plans or scope for working together to improve the position.

You might also consider switching to a supplier that only buys electricity generated from renewable sources. Or even investigate on-site renewables of your own.

When looking at providers, green tariffs are always a safe bet, but it’s important to ensure that there is a tariff backed by a “guarantee of origin”, so you can be sure that you are getting clean power.

If you have a company fleet, you will need to think about what this looks like in light of the Prime Minister’s commitment to banning the sale of new petrol and diesel cars from 2030.

By starting the transition to hybrid and electric vehicles as soon as realistically possible, it will pay dividends in the longer-term as pressure grows to tackle polluted air.

Planning now is the key

If you are aiming to get to net zero by 2050, you need a plan now. Start your journey by measuring your impact, setting your priorities and picking off the easy wins.

The journey to net zero can have significant benefits – from costs and collaboration, to boosting your reputation with clients and customers who are increasingly concerned about climate change.

While adaptation may cost in the short term, the long-term rewards can be significant.

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