Federation of Small Businesses (FSB) Vice Chair for Policy Martin McTague discusses how, with the right support, small businesses can play a critical role in helping the UK reach its green targets

It is undeniable that small businesses will play a critical role in the transition to Net Zero. With COP26 approaching, the UK Government must show it has the full support of businesses as it seeks to show global leadership in this space. And this year, the Federation of Small Businesses (FSB) will have a strong presence at COP26 – at this momentous time in history, we are committed to doing all we can to support small businesses in this space, which is so often dominated by large corporates.

In June 2019, the Government passed laws requiring the UK to bring all greenhouse gas emissions to Net Zero by 2050

In June 2019, the Government passed laws requiring the UK to bring all greenhouse gas emissions to Net Zero by 2050. It is also aiming for a 68 per cent reduction in greenhouse gas emissions by the end of the decade, compared to 1990 levels.

But the UK Government’s ambition for net zero cannot be realised without an empowered and supportive small business community.

They are keen to do their bit, but this needs to be matched by a fair framework for policymakers that understand how small businesses can play their part. Helping small businesses to understand how they can contribute to reach the Government’s targets is one of FSB’s top priorities, as it will create a ripple effect in society to spur real and positive change.

Against a backdrop of Covid-19 restrictions, work in this space has not taken a back seat. As COP26 draws nearer, all eyes are on businesses to step up their environmental game, but they must not be disproportionately hit by cost burdens.

In November of 2020, FSB joined forces with the other main UK business groups – the CBI, Make UK, British Chambers of Commerce and the IoD – to call for the Government to take a principles-led approach to Net Zero policy development.

Our aim was to highlight the need to achieve a ‘Just Transition’ to Net Zero that empowers all businesses, large and small, to play their part.

The five key principles intended to act as a ‘fairness test’ for policymakers are:

  1. Fairness of Ambition: Government’s climate change policies must be aligned to the latest scientific evidence and demonstrate ambition that matches the reality of the challenge, both in its timescales and its extent.
  2. Fairness of Accountability: Government, alongside Regulators, should provide coherent and accountable governance and ensure that climate change policies are coordinated.
  3. Fairness of Delivery: Government should, where possible, support, empower and incentivise businesses to find their own ways to net-zero, acknowledging that a one-size-fits-all approach to policy delivery may not work in all cases and that a diverse set of business-led solutions and incentives will be needed.
  4. Fairness of Opportunity: Government must provide a level playing field, ensuring businesses of all sizes, in all sectors, across every region and nation, can contribute to a net-zero economy, through their innovations, investments, and markets.
  5. Fairness of Cost: Government climate change policies must be affordable and achievable. Government must ensure that the costs of transition to net-zero are distributed equitably among businesses, workers, and consumers, based on their environmental impact, ability to pay, ability to adapt and potential for gain.

The principles provide a robust framework and are the perfect blend of accountability, credibility, and fairness, allowing the UK to maintain its current domestic and global ambitions.

The Government has also issued a ten-point plan for a Green Industrial Revolution, creating 250,000 new jobs. They mark the beginning of the UK’s path to net zero, but gaps remain. For example, they provide no solution for supporting the affordable development and roll out of more environmentally friendly HGVs.

Evidence suggests that small businesses support net-zero objectives but do not yet understand their pathways to achieve this. It is a tough but important world to navigate and it is important they are given a clear pathway to the Government’s net zero goal.

FSB recognises that the transition to net-zero is a team effort. That is why FSB is excited to be part of the Broadway Initiative – an alliance of leading business organisations set up to enable the UK economy to meet its net-zero and broader environmental goals. This spring, the Broadway Initiative will launch its Net Zero Hub – the first of its kind explicitly targeted at SMEs. The platform will provide businesses across the UK with trusted online information tools, including clear information on financial and digital support while fostering peer-to-peer relationships and explaining the benefits of signing up to climate commitment. We are also a leading player within the plans being developed by the UK Government’s Net Zero Business Champion, Andrew Griffith MP.

As the UK’s largest business association, FSB recognises its unique position to empower small businesses and enable government policy makers to understand the type of support small businesses need to reach their net zero goal. We will be showcasing businesses successfully leading the way to net zero, and provide others with the tools to do this within their own firm.

However, the Committee on Climate Change has warned that the UK is on course to miss its climate target without more action. That’s why the Government must introduce environmental policies that are measured, proportionate and timely to give firms a fair chance to adapt, thrive and grow in a low-carbon economy.

The UK is committed to becoming a powerhouse for low carbon-infrastructure, technology, goods and services, lighting a path that others can follow. With the right support, small businesses can play a critical role in helping the UK reach its green targets and shore up supply.

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