Lloyds bank has released its ‘From Now to Net Zero Report’ analysing research amongst 1,000 UK SMEs determining the five stages of their net zero journey and using the results to design a practical guide for SMEs on how to curb their carbon emissions.
The report found that while most SMEs desired to make a change, many were still unsure how to implement that change in practical terms and that transitioning to a green economy will mean challenges for many, especially short-term challenges such as energy investment and input costs. The 2022 SME Net Zero Monitor survey took the research one step further and revealed the number of UK SMEs at each stage of the journey.
Understanding the impact of Net Zero
The ‘From Now to Net Zero’ report revealed while almost all (89%) SMEs recognised that sustainability is an important issue for their business, under half (40%) did not know what it means for their business in practical terms. However, general knowledge around the subject seems to be growing, with the Net Zero Monitor showing 95% of SMEs are now aware of the government’s 2050 Net Zero target.
39% of businesses surveyed have set a tangible target and a deadline to get to net zero, while 24% have set a target without a deadline. In contrast, just 7% said they have not set a target, and have not yet started research on what they need to do to reach net zero.
Recycling and reducing waste are currently the top activity undertaken by SMEs – with almost two-thirds (62%) having already taken these initiatives. Elsewhere, 60% are actively reducing their energy consumption and 36% are sourcing renewable energy as well.
The importance of collaboration
Lloyds argue that SMEs won’t be able to reach net zero alone and collaboration will be one of the key factors if businesses are to get there. Their research showed many SMEs are already aware of this fact, with 56% engaged directly with other businesses they work with on how best to reduce their greenhouse gas emissions. Moreover, around half say they have already benefited from other businesses they work with on reducing their emissions as well.
The 7% of SMEs that have already reached net zero emissions can help lead other SMEs towards more sustainable business practices – Lloyds call these businesses ‘our Net Zero Heroes’. For example, Allium Energy in Yorkshire is using gas produced from their former waste sites to create power and heat locally, with any excess sold to the National Grid.
Where are SMEs looking for support?
SMEs are mostly turning to the internet for support – 50% have sought information online and 49% say they accessed material from the UK Government’s website. Elsewhere, 30% have asked for help from external consultants and 20% have used external membership bodies. 45% of SMEs said they identify their bank as a potential support source, but only 14% have actually worked with banks on their transition to the net zero economy.
What is Lloyds Banking Group doing to support SMEs?
Lloyds Net Zero Monitor shows that SMEs are on their way to understanding the importance of net zero – many have already taken practical steps and set out realistic goals to decarbonise their business.
The banking group is offering support to businesses through its sustainability hub regardless of where they are on their journey. From those looking to take the first step on their journey to practical guidance to measuring carbon emissions with their Green Buildings Tool and monitoring progress and impact moving forward.
Lloyds are also focused on supporting key sectors and industries as they move towards a net zero future. In 2021, by creating a Sustainability and ESG Financing team to support their Corporate and Institutional clients with more ESG-linked loan transactions.
A link to the full report can be found here.
