Sustainability for SMEs

The importance of net zero

In 2019, the UK government set a target for the UK to be net zero by 2050. This means that, by that date, all greenhouse gas emissions still produced in the UK will need to be balanced by emissions taken out of the atmosphere. Whilst small and medium enterprises (SMEs) may individually have low emission footprints, it is estimated that collectively, as of 2021, they account for around 43-53% of UK business greenhouse gas emissions¹.

To reach this target, it is going to require concerted action by everyone, across sectors, geographies and organisations – from organisations like Barclays working to achieve net zero in our own operations, progressively reducing our financed emissions, and providing finance to accelerate the transition to a low-carbon economy, through to smaller businesses that are increasingly looking to transition to net zero as their customers seek low carbon goods and services. We are therefore passionate about providing help and support to our one million clients on their journey to become more sustainable and help the UK reach its net zero target. 

The task ahead for UK SMEs

As of 2021, there were 5.6 million SMEs in the UK². Each business Barclays supports can play a role in helping to reduce the UK’s greenhouse gas emissions. Yet, as of early 2022, data revealed that three-quarters of UK SMEs are without credible plans to reduce emissions¹. Businesses have faced several crises over the last few years, including the COVID-19 pandemic and a growing cost of living crisis, and many have had to adapt and evolve to survive and thrive in the changing economy. The journey to sustainability, however, remains a priority and many businesses will need extra support to start their journey towards a low carbon-future.

Deloitte, a leading professional services consultancy, released a 2021 sustainability consumer report which highlighted that “nearly 1 in 3 consumers claimed to have stopped purchasing certain brands or products because they had ethical or sustainability-related concerns about them”³. Consumer behaviour is shifting, and businesses should consider the impact of not responding to keep pace with their customers’ expectations. SMEs that have set out a clear commitment to net zero, or have articulated plans to become more sustainable, can expect a range of benefits, including strengthening their relationships with many customers.

The November 2021, COP26 in Glasgow saw the Chancellor announce plans for all UK listed businesses to produce climate transition plans by the end of 2023. This has direct consequences for most SMEs. Because of the move towards to considering and addressing ‘Scope 3’ emissions (broadly speaking, the emissions produced by a company’s value chain), listed businesses will be reaching out to their suppliers to ask them to both measure and reduce their carbon footprints. If your business has a listed business as a customer, you can expect to be asked to answer these questions.

Investing in the transition to a low-carbon economy is helping many businesses to strengthen their brand, grow their customer base and attract and retain top talent⁴. This has the potential to add new revenue opportunities⁵. Businesses that optimise their processes will save on valuable resources, saving money whilst protecting the environment⁶.