Decarbonising SMEs

The UK has 6 million small- and medium-sized enterprises (SMEs) – businesses with fewer than 250 employees. 99% of all UK businesses are SMEs, and the vast majority of those are micro-enterprises with fewer than 10 employees. Collectively, SMEs are responsible for 52% of the turnover of UK plc and they employ more than 16.5 million people – a quarter of the total population. SMEs need to be supported in their translation to net zero, otherwise we risk leaving a core component of our economy behind as we turn green.

To ensure SMEs are not left behind or forgotten in this transition, B4NZ currently have two active programmes of works to identify current barriers and challenges and push for feasible yet effective policy options.

1. Project Perseus

Bankers for Net Zero, alongside Icebreaker One, are developing Project Perseus, a pragmatic whole-of-market solution to create rapidly scalable, low-effort, low-friction sustainability reporting. This aims to help unlock access to capital by automating GHG reporting for every SME in the country.

2. SME Advisory Group for the Transition Plan Taskforce

B4NZ are working with the TPT to convene an SME Advisory Group to consider proportionate sustainability reporting and transition planning for SMEs.

Since October 2023, the SME Advisory Group explores how the private sector, public sector and trade associations can engage with SMEs to accelerate credible SME transition planning. These workshops explored where each of these sectors could play an additional role in enabling transition plan preparation and were the biggest barriers and opportunities lie to supporting SMEs to engage in sustainability efforts and transition their business practices effectively.

Recommendations made in these workshops will inform the TPT’s “forward pathway document”, due to be published in February 2023, which lays out future priorities for the transition plan ecosystem.

Greening the Built Environment

Greening the built environment is one of the biggest economic, social and environmental opportunities for the UK over the next three decades. It will create jobs, stimulate economic growth, reduce fuel poverty, improve health and wellbeing, not to mention helping to eliminate the 40% of UK greenhouse gas emissions that are produced by the built environment sector (UK Green Building Council).

B4NZ recommends that Government should roll out an ambitious programme of deep retrofits in the social housing sector, bring forward implementation of the Future Homes Standard and Future Buildings Standard, and set out a clear pathway for how energy efficiency standards that will ratchet up all the way to net zero compliant over the next 20-30 years

In order to turn these recommendations into action, B4NZ are currently working on two live projects:

1. EPC Policy Campaign

B4NZ launched a campaign to challenge EPCs with the aim of ensuring that their reform becomes a priority in the political agenda as existing metrics do not effectively encourage the adoption of energy-efficient practices and heating solutions necessary to contribute to the decarbonisation of buildings.

Our campaign officially commenced with a kick-off meeting in October, which brought policymakers, regulators, leading organisations, and financial institutions to share knowledge and begin to work together towards the common goal of accelerating EPC reform. The workstream will continue to explore innovative technologies and solutions to improve energy performance in buildings and examine how EPC ratings can be made fit for purpose to deliver on the UK’s Net Zero targets.

2. National Retrofit Hub Finance Working Group

B4NZ are co-convening Finance working group for the newly formed National Retrofit Hub with our partners at the Green Finance Institute and LSE Grantham Institute. The National Retrofit Hub is an industry and UK Government backed initiative to enable the delivery of retrofit at scale across the UK. This working group works to define and implement solutions to retrofit financing processes across the domestic property market.

The group was launched in July 2023 with its first sessions bringing together lenders, local authorities, delivery partners and the wider ecosystem to begin exploring the barriers and enablers for financing retrofit at scale and to identify opportunity for collaboration to drive positive change.

Fertile Ground: Accelerating the Transition to Net Zero Agriculture

Agriculture is responsible for 11% of total greenhouse gas (GHG) emissions in the UK, despite only representing 0.5% of GDP. Concerningly, emissions from agriculture and land use have remained relatively stable since 2008, which is inconsistent with the UK Government’s Net Zero target. Accelerating the transition to low-emissions and nature-positive farming is essential if the UK is to meet its long-term climate and nature goals.

The Bankers for Net Zero Agriculture working group was established in December 2022 to develop specific recommendations for accelerating UK agriculture’s transition to net zero. The working group includes participants from the following banks and stakeholder organisations: Atom Bank, Gentle Farming, Handelsbanken, HSBC UK, Linking Environment And Farming (LEAF), the National Farmers’ Union (NFU), the Nature Friendly Farming Network (NFFN), Oxbury Bank Plc, Paragon Banking Group, Re:Pattern, the Soil Association and Triodos Bank UK.

The working group was facilitated by Volans, a think tank and advisory firm at the forefront of sustainability and innovation and co-founder of the Bankers for Net Zero initiative.

Our recommendations:
  • Incentivise peer-to-peer learning and knowledge exchange with government grants in
    support of national climate and nature goals.
  • Create a pre-competitive forum for banks, farmers and key players in the food value
    chain to come together and align on GHG measurement, reporting and standards.
  • Use public sector food procurement standards to create demand for low-emission
    farming in food supply chains.
  • Set out a clear plan and timeline for phasing down the use of fossil fuel-based
  • Clarify how public finance will be used to attract and complement private finance.