Valpy Fitzgerald, Director of Green Markets at Opus Energy, highlights the biggest sustainability obstacles SME owners are facing right now in and explores the ways in which they might overcome them
Throughout the coronavirus pandemic, small and medium-sized businesses across the country have fought their way through adversity in an act of great survival. For most business leaders, this probably involved making tough decisions that they otherwise would have avoided altogether. Time and time again, they’ve shown the kind of grit and decisive bravery that’s required to start a business in the first place. The journey has been tough. But now, as we start the recovery process, this same boldness must be aimed at one of our greatest challenges – climate change. Collectively, SMEs make up the UK’s biggest employer – so their commitment to playing their part in reducing the nation’s carbon emissions to net-zero by 2050 is vital.
Encouragingly, in a recent survey of 1,000 SME business leaders, more than half said that sustainability has become more important to their business in the wake of the coronavirus pandemic. 48% agreed that they need to make bolder decisions in this area. Yet, many of them also said that there are several hurdles in their way which are preventing them taking greater strides. So, what is it that’s holding them back? And more importantly, what can they do to overcome it?
‘I need to stabilise my business’
No doubt about it: coronavirus has delivered a devastating blow to UK businesses. What’s more, SMEs have been disproportionately affected as their financial reserves simply don’t stretch as well as big business and multinational corporations.
Around a third of SME business leaders say that it’s the need to stabilise their business that’s holding them back from taking bolder action in the name of sustainability. Yet, previous recessions have taught us that sustainability can actually be a lifeline for businesses during tough times. After the 2008 financial crisis, 93% of CEOs said that they believed sustainability had become a crucial part of their company’s future success. A big part of this was about building trust in the public; customers had started to vote with their money, choosing to spend with companies that aligned with their values.
Post lockdown, the public has never been so restless for change. This is evidenced by the huge demand for a Green Recovery and the growing number of people choosing to shop sustainably. So, while businesses need to get themselves in check financially, to abandon their sustainable development goals would be highly damaging and would risk losing any goodwill they’ve created with their customers and stakeholders.
Finding the right balance between financial necessities and sustainable responsibilities will therefore be crucial to a businesses’ success in the long run and in the fight against climate change.
‘It’s too expensive’ / ‘it doesn’t make sense financially’
Many business owners and senior decision-makers allow themselves to fall for the myth that making sustainable changes requires a huge budget. Indeed, a quarter of SME bosses cited cost as one of the biggest sustainability obstacles for their organisation, while another 25% said it’s because shareholders and investors don’t see the link between sustainability and profit.
The fact is that a big part of being sustainable is actually about saving money. Yes, some sustainable technologies such as solar panels require an initial up-front investment, but these often save you money in the long term. What’s more, for some SMEs – particularly those that own their own land and/or premises – installing solar panels or wind turbines not only allows them to reduce their energy bills by generating and using their own electricity, but it also can create a passive revenue stream. That’s because any excess electricity can be sold back to an energy company using what is known as a Power Purchase Agreement (PPA) or an Export Tariff.
Sustainability also doesn’t have to be a case of going big or going home. There are plenty of small steps you can take that, when measured over time, end up going a long way. For example, did you know that turning the office heating down by 1°C you can reduce your annual heating bill by up to 8%? So, for a business spends £500 a month on energy, that small turn of the dial would save them £480 each year – the equivalent of one month’s energy.
We need to change the narrative away from sustainability as a cost, towards sustainability as a cost saver.
‘It’s not a big enough issue for my customers’
The future of the planet is everyone’s business. Yet almost a fifth of SME bosses still say that sustainability is not a big enough issue for them or their customers.
While for some companies in the UK the effects of climate change may still feel abstract, like they don’t affect you or your customers, the truth is that sustainability is one trend that you cannot ignore.
From a purely commercial perspective, choosing to overlook sustainable consumer trends could leave you at a competitive disadvantage. For example, consumer research published by the insights company Kantar has found that more than three quarters (77%) of Brits have switched, avoided or boycotted grocery brands because of their environmental policies.
More importantly, businesses need to recognise the impact their operations have on the environment and the impact this will have on future generations. Last year, the business sector accounted for 18% of total carbon emissions in the UK, making it one of the biggest contributors of greenhouse gasses along with energy production and transportation.
More people are choosing to shop locally and more ethically than ever before, which means that small to medium-sized businesses are becoming even more influential. Now is the chance for small businesses to make an even greater difference by emphasising the importance of the climate emergency and the UK’s 2050 net-zero strategy. The spotlight is firmly on the SME, and it’s the bold and brave leaders who will lead the way.