The role of SMEs in the UK’s ‘green transformation’
Sam Smith, CEO of finnCap Group shares with Business Leader, her thoughts on the impact UK SMEs can have the nation’s ‘green transformation’.
One of the foundations of the UK climate plan is the recognition that businesses are critical to climate action. Companies generate more than two thirds of the world’s carbon emissions, and the UK government has published a roadmap to help them deliver net zero emissions by 2030.
In recent years large corporations have heralded the benefits of ESG standards and it’s not surprising they dominate the headlines when it comes to achieving net zero goals. An increasing number of businesses are adopting ground-breaking targets to reach net zero carbon – with some going beyond to become carbon negative. The upcoming COP26 in Glasgow will undoubtedly put a spotlight on the global race to net zero emissions.
If you’re an SME, you might be thinking that any steps you take won’t make any difference – that is a race where you’ve been left behind. But that’s simply not the case. SMEs are the lifeblood of our economy. The UK’s six million small businesses make up 99% of the UK’s population, employ 61% of the workforce and generate £2.2 trillion of revenue to the economy. The Organization for Economic Co-operation declares such businesses to be fundamental to the “green transformation”. In these terms it’s paramount that businesses of all sizes come together to tackle climate change.
With SME owners often focused on the day-to-day challenges of running a business and trying to make a profit, many may struggle due to a lack of time or in-house sustainability expertise. The good news is that there are many resources available to help them on their sustainability journey. Whether it’s through the Government’s new UK Business Climate Hub, or various trade and industry bodies, I’m encouraged by the huge momentum and drive to support sustainable SMEs.
We know that measuring and reporting on ESG metrics can be complex, confusing, and time-consuming. To cut through the clutter and simplify the process, finnCap has developed a basic ESG reporting scorecard, enabling growth companies to build a better picture of their ESG performance, help them make more informed decisions, and operate in a greener and more sustainable way.
In some ways, SMEs are ideally placed to become the leaders of sustainable business. Without the scale or complexity of large corporations, they can arguably pivot quicker and implement sustainable practices more easily. I firmly believe that becoming more sustainable will both help SMEs fulfil their growth potential and protect them against the planet emergency. Sustainability and profitability can – and should – go hand in hand. Funding will increasingly flow to those companies that are meeting urgent environmental and societal needs. Customers and employees are also becoming increasingly discerning about which companies they want to support and work for. Building what we at finnCap call ‘sustainable advantage’ has never been more important. Now is the time for SMEs – this vast and absolutely vital segment of the economy – to rise up to the challenge and embrace the opportunity.