The UK’s most vociferous climate change deniers will argue that our commitment to Net Zero by 2050 will harm the economy, make business uncompetitive and costs jobs.
The open-minded of course know that’s tosh. In 2022, the low carbon economy delivered £71 billion of Gross Value Added to the UK. The London School of Economics estimate that the economic opportunity arising from Net Zero by 2050 will be in the region £1 trillion.
Whilst a large part of this value will be in directly developing and delivering climate solutions such as renewable energy and energy saving technology as we move away from imported fossil fuels, it represents a significant opportunity for everyday SMEs in virtually every sector.
A report last year revealed that 72% of consumers actively consider sustainability in their purchasing decisions, and 75% consider that more important than brand name. That conflicts with the 94% of retailers who believe that brand is more important to consumers than sustainability.
So how can SMEs benefit from increasing demand for low carbon and sustainable goods and services? How can a business be pivoted into this market. Here are a few steps and tips:
Communicate your aims and ambitions. First you need to know your starting point – your business carbon footprint and sustainability risks- then state what your ambitions are; when you plan to achieve Net Zero carbon in your business and when you will eliminate environmental risks. Progress against these needs to be measured and reported. The key is openness and accuracy, to avoid claims of ‘Greenwash’. Consumers are increasing wise to bold claims and lack of transparency.
This provides the framework for all a business’s sustainability gains.
In -house emissions – an audit of energy, water, travel and waste will reveal where carbon reductions can be made. A quick and easy first step may be simply switching power suppliers to one which provides 100% renewable energy.
Incoming Supply Chain – for many businesses, emissions from the supply chain of goods and services may well exceed the in-house emissions. Once these have been measured and analysed, we can start to act on reducing them. That might be, for example, local and/or seasonal sourcing of food for a hospitality business, it might be switching supplier for a part or component or it may mean a complete change to an alternative part or component, or one made from a different material.
Clearly, in this case, we need insight into our suppliers carbon emissions, which is exactly why Supermarkets for example are mandating to their suppliers carbon analysis and reporting.
Packaging – this is the first thing a consumer sees and touches when receiving a product, and most consumers are now wise to the environmental impact of packaging. Some sectors have been quick to address sustainable and low carbon packaging, others not.
The importance of having a sustainable packaging plan cannot be overstated.
End-of Life – for some sectors, consumer ‘white goods’ for example, supplier responsibilities for end of product life have increased recently, and this may well trickle down.
Considering the end-of-life of a product has to be integral to any business sustainability claims, and that starts at the product design phase – what materials go into a product, can they be recycled or re-used, can the product be easily disassembled to enable component part recycling using existing techniques?
Offsetting – you can of course do what many businesses have done and ignore most of those steps and simply buy carbon offsets – offshoring your climate impact.
We’ll cover offsetting in a future article, but be aware that, firstly, offsetting will always be a business cost (as opposed to actually cutting carbon in your operations, which will save money) and secondly, such approaches are increasingly recognised by consumers as ‘Greenwash’ i.e. ‘business as usual, but we’ve just paid for the problem to go away’.
Offsetting must only be a part of a business sustainability strategy, not it’s totality.
Conclusion
That might all sound complicated, hard to understand and even harder to deliver.
Certainly, achieving all those elements will not happen overnight, they represent a process that may take a year or two. The market understands that though.
What the market for sustainable and low carbon goods and services wants is to know what your aims and ambitions are, when you want to achieve them by, how you will achieve them and how you will measure and report progress. That requires detailed insight, transparency and good communications.
Ewan Bent, 31st Jan 23
