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Net zero – what are the benefits to your business?

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The impact of climate change has become one of the most pressing issues facing humanity in the 21st Century.

With a renewed political focus on reducing carbon emissions and greenhouse gases(GHGs), the Government has committed to a legally binding target of net zero emissions by 2050 with smaller businesses pivotal in the race to net zero.

Smaller businesses are a major source of emissions in the UK with research finding that smaller businesses account for 50% of all UK business-driven emissionsLink opens in a new window.

Whilst 57% of smaller businesses reported they were aware of the government's 2050 net zero target, the same research found that 76% of smaller businesses have yet to implement a decarbonisation strategy.

Costs, lack of appropriate technology, infrastructure or vehicles, and an inability to find information on net zero were cited by smaller businesses as some of the barriers to preventing action.

What is net zero for smaller businesses?

To help combat the rise in greenhouse gas emissions, companies can explore adopting sustainable practices and reducing carbon emissions.

Net zero activities can encompass a range of business operations and practices, including:

Even the smallest businesses can reduce their carbon emissions, and nearly half (47%) of smaller businesses state that carbon reduction is a high or very high priority.

The good news is that there may be a whole range of benefits for businesses that embrace net zero – from boosting your reputation, reducing costs through wastage, and protecting your business from over-reliance on fluctuating fossil fuel-based energy supplies.

How net zero can help your business

Aside from helping improve the world's environment, adopting net zero strategies may help your business grow, save money, and boost business resilience.

Studies by Deloitte have shown that 55% of consumersLink opens in a new window have chosen food and non-alcoholic beverage brands that have environmentally sustainable values and practices, for example.

The same report found that 32% of consumers would be prepared to pay more for goods and services if it ensured brands reduced their carbon footprint.

Re-evaluating your strategy and implementing a more carbon neutral plan may therefore benefit your company.

Adopting carbon neutral practices may enhance your reputation as a business.

Research by the Carbon Trust found that customers increasingly expect companies Link opens in a new windowto make sound ethical decisions on their behalf, with green businesses attracting new customers.

Examples of small business sustainable behaviours include: participating in carbon offsetting schemes such as tree planting, sourcing materials from local suppliers, reducing emissions from food miles, and tackling waste destined for landfills.

Swapping your energy to renewable sources may help reduce your utility bills as a business.

This can be through installing renewable energy generators such as solar panels or simply switching to a green tariff.

Simply examining how energy is used in your business may lead to reducing energy consumption and costs.

The Carbon Trust helped one Scottish manufacturerLink opens in a new window to save £170,000 per year – equivalent to 2,000 tonnes of annual emissions – by simple changes to its ventilation system.

Other business costs can be reduced too, such as switching to electric vehicles if your business routinely enters low emission zones in major cities.

Becoming a net zero business may be attractive for investors and shareholders looking for companies with a long-term sustainable strategy.

Investors may be attracted to smaller businesses that are less reliant on fossil fuels, as business operations are less likely to be disrupted in the event of supply problems.

Aiming for net zero can make your small business more resilient against market or national disruptions.

For example, the use of electric vehicles may help protect your business from rising fuel costs and disruptions in fuel supply chains.

Similarly, adopting alternative energy supplies such as solar or wind may help shield your business from unexpected increases in the cost of energy.

A recent British Chambers of Commerce survey Link opens in a new windowfound that only 11% of respondents measure the carbon footprint of their business.

The study suggests that knowing your carbon footprint and reducing it could give you a competitive advantage over other businesses with some customers increasingly interested in a businesses' sustainability credentials, from the packaging of products to the carbon footprint of produce.

Having a transparent relationship with customers may help them recognise your reliability and make them more likely to return to your product or service.

YouGov found that customers are increasingly willing to pay more for environmental productsLink opens in a new window, with younger customers in particular willing to pay extra for sustainable products.

Regional support

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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Making business finance work for you

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Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.