With 5.9 million SMEs in the UK, collectively employing 16.8 million people and accounting for an estimated 52 per cent of UK Private sector turnover1, SMEs have a significant role to play in the race to decarbonise the UK.
A new report from Bankers for Net Zero (the UK chapter of the Net Zero Banking Alliance), has revealed the crucial role banks can play in measuring and reducing the greenhouse gas emissions from their SME clients. Prepared by the Smart Data Foundry, the report highlights the results of an 8-week scoping exercise, which comprised of desk research, interviews with experienced academics as well as Bankers for Net Zero member banks, including HSBC UK, the British Business Bank and Santander.
The scoping programme delivers a long-term work plan to define the role banks can play in creating awareness of emissions and incentivising SMEs to make reductions. This would allow banks to act as catalysts for place-based initiatives and signposting to net zero government programs. Enabling SMEs to start reducing their emissions now is critical to the goal of ensuring a ‘just transition’ to net zero. The report urges both banks and policymakers to play a role in helping SMEs seize the opportunity of taking early action in the transition.
The report describes Bankers for Net Zero’s plans to test the effectiveness of different mechanisms to engage SMEs in reducing their carbon footprint. The ambition is to roll out a first of its kind pilot model over the next 12 months which could then be scaled up to SMEs across the UK. This working pilot will serve as part of a recommendation to policymakers and regulators to ensure a level playing field in the transition to net zero.
1 BEIS (2021) Business population estimates for the UK and regions 2021