small businesses will need help if Scotland is to achieve its net-zero goal- Steven McAllister

Steven McAllister is a Director and renewable energy specialist, Davidson Chalmers Stewart

While some may think that only the largest multinational corporations (along with the public sector) can support this agenda, the fact is that every business – large or small – has a role to play. Indeed, it will be essential for all businesses to do their part if we’re going to achieve the Scottish Government’s world-leading climate change targets of reaching ‘net-zero emissions’ from carbon and all other greenhouse gases by 2045. To ensure we are on the path to success, by 2030 Scotland will need to see a 75 per cent reduction of greenhouse gas emissions compared to 1990 levels.

There are more than 360,000 SMEs operating in Scotland, accounting for 1.2 million jobs. If each of these businesses were to take small, practical steps to cut their emissions in half, it would have a significant impact on climate change.

This will firstly require raising awareness amongst many SME owners that ‘being net-zero’ means not increasing the overall levels of greenhouse gas emissions, including carbon dioxide and methane, in the atmosphere. The next key stage is about supporting businesses to help them reduce emissions as many SMEs will be unaware of their carbon footprint and, particularly after the financial impact of Covid, concerned about the costs to remedy the situation.

In May, the UK Government launched the SME Climate Hub, a new campaign aimed at small businesses to help them cut their emissions in half by 2030 and then further reduce them to net-zero by 2050. The Climate Hub provides SMEs with tools and resources to achieve this aim including practical steps where they can make an impact. These include introducing a cycle to work scheme; minimising waste from products and packaging or simply pledging to go paperless; electrifying a vehicle fleet; installing renewable electricity supply, such as solar panels or heat pumps; or offsetting the carbon that can’t be reduced.

Whilst the concept behind the SME Climate Hub is sound, there are other important issues still to be addressed in supporting small business carbon reduction measures. For many SMEs, this will require extensive investment in terms of time, training and, perhaps, expenditure in the form of new machinery or personnel. Multinationals with large balance sheets can usually afford to implement such measures but it represents a much bigger financial challenge for smaller businesses with fewer employees. Without some form of governmental financial support or incentive, it is difficult to see most SMEs being willing or able to play their full part.

A carrot and stick approach, with rewards for companies that embrace net-zero objectives and penalties for those which do not, will need to be considered by all governments. Further means of incentivising corporate power purchase agreements (PPAs), where businesses can reduce their carbon footprint through a direct supply agreement between themselves and a renewable energy producer, must also be considered. In the absence of government subsidies, corporate PPAs are becoming an increasingly common way for renewable developers to fund new-build plants whilst simultaneously allowing businesses to enhance their green credentials.

As part of its policy on climate change, the Scottish Government will need to continue engaging with businesses on decarbonisation. This includes building on existing initiatives such as its funding of the Environmental Placement Programme which offers paid placements for graduates to do credible work in the environmental sector whilst helping their host company reduce emissions and improve their green credentials. The VIBES awards are another Scottish Government-supported initiative which help promote the net-zero agenda by recognising businesses in Scotland that are taking steps to improve or reduce their impact on the environment.

As we approach COP26, there is much for both Scotland and the UK to be proud of in their efforts to address climate change. However both the Scottish and Westminster Governments need to ensure they do more in terms of policy to encourage and reward those businesses that actively embrace their climate change obligations while penalising those which ignore them.

Steven McAllister is a Director and renewable energy specialist, Davidson Chalmers Stewart