Climate, carbon and COP26: what about small and medium businesses?

Since the COP26 negotiations closed their doors, debate continues amongst policymakers and scientists. Have agreements gone far enough to avoid climate catastrophe and limit global temperature rises to 1.5 degrees? Whatever your view, in the absence of strong multi-lateral, international agreement, it’s clear that all businesses have a responsibility to act now — and an opportunity to demonstrate leadership on climate and CO₂ emissions.

Tracey Herald, Head of Sustainability at Virgin Media O₂ Business, sets out the important role small businesses must play in helping the UK to reach its net zero targets.

COP26 saw more than 40 countries pledge to phase out coal, over 40 world leaders agree to speed up affordable and clean technology worldwide by 2030 and more than 100 countries pledge towards reducing and reversing deforestation.

For businesses, there was no shortage of big brands hitting the headlines with bold sustainability moves and climate action commitments.

The talks themselves also focused on asks for big business — for example, mandatory reporting for larger companies around the risks and opportunities facing them from climate change. Of course, larger companies have a leading role to play, but for me there was a hugely significant group missing from the COP26 spotlight: the UK’s small and medium businesses.

COP26 did a great job of getting the business world talking about the need for sustainable practices and commitments. But what it failed to do was to effectively address the needs and considerations of SMBs. As business leaders, sustainability is at the top of the agenda for so many of us – but it’s a fact that smaller firms need more support and more access to resources to take action.

A survey conducted earlier this year by Virgin Media O₂ Business and The British Chambers of Commerce showed that one in five small businesses in the UK don’t fully understand the term ‘net zero’. Just one in 10 are measuring their carbon footprint. And only one in seven have set targets to reduce their emissions, down from one in five (21%) before the pandemic.

Smaller firms make up 99% of the UK’s business landscape and employ the majority of the country’s workforce. Almost a third of the UK’s total greenhouse gas emissions come from SMBs. That’s a significant proportion – and small businesses need better support in understanding and cutting their carbon footprints if the UK is to reach its net zero goal.

So what does this really mean?

It’s encouraging that 2,000 small businesses signed up to join the UN’s Race to Zero campaign, but more support can help turn thousands of commitments into millions.

Business owners are understandably stretched as a global pandemic persists and uncertainty about the future continues. Many feel that reducing emissions isn’t a priority right now – which highlights why a COP26 without much reference or relevance to small businesses could make it even harder to encourage action.

To engage SMBs properly there needs to be a clear path of communication between larger businesses, the government and smaller organisations. We need an open discussion on areas like: ‘what is net-zero and why does it matter?’, ‘how do you measure carbon footprint?’ and ‘why is it important for my business to reduce its emissions?’.

We also need big business and government to share what they know with smaller businesses. That is why, alongside the British Chambers of Commerce, we have launched the Net Zero Hub, a free online resource offering practical guides, real-life insights and useful tools to help small and medium businesses reap the benefits of reaching net zero.

We need to get SMBs engaged in the conversation, and not have them on the outside looking in.

It won’t come as a surprise that the main barriers for SMBs to reduce their carbon footprint are financial. A third of small businesses we asked said that high upfront adaptation costs were a significant obstacle, alongside a lack of finance, demonstrating the need for more support.

Many small firms are trying, whether that’s reducing waste, relying on digital connectivity to work remotely and take cars off the road, or using smart tech to cut energy consumption at their premises. But smaller firms simply don’t have the financial power of their larger peers to reduce their environmental impact – and nor are they likely to be investing significantly without better financial support.

Despite the lack of representation at COP26, the opportunities for SMBs are clear to see. From my perspective, these fall into two categories: the benefits that come from reducing your own emissions, and the chance to help drive net zero innovation for others.

Every SMB in the UK has a role to play in reaching the country’s net zero target. For many of these businesses, it will simply be a case of reducing their day-to-day energy consumption. While this makes good business sense – as usage and wastage fall, so do costs – there can also be a customer benefit.

Consumers are becoming more and more environmentally conscious in their purchasing decisions. Business customers are also looking to green up their supply chain, so improving your sustainability credentials can create added value for you as a supplier.

However, some SMBs will also hold the key to unlocking the low carbon solutions that can help drive the whole world towards a more sustainable future. These innovators, often enabled and driven by new technology such as 5G connectivity, the Internet of Things (IoT) and artificial intelligence (AI), are likely to be central to a lot of the boundary-pushing ideas and solutions that will help us deliver a net zero economy.

Take for example Virgin Media O₂ Business's work alongside the Darwin Innovation Group. Here we are supporting the development of connected autonomous vehicles that are set to help reduce emissions on our roads.

There will be hundreds of other projects like this in the UK that will all be possible because of the innovation and thinking of small British businesses.