Business Addressing Climate Change

On this page is information and resources for businesses who want to learn more about the initiatives and support available to help them on their journey to net zero.

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No one can deny the compelling range of evidence that points to climate change. It is clear that immediate and wide-scale action is needed to prevent the situation from getting any worse.

In May 2021 the UK government launched a campaign inviting British small- and medium-sized businesses (SMEs) to join the ‘Race to Zero’ – a global crusade that sees government and businesses pledge to halve emissions by 2030 and achieve net zero emissions by 2050.

What is Net Zero?

Net zero describes a target for reducing greenhouse gas emissions, in particular carbon dioxide. It is achieved when the amount emitted into the atmosphere is no more than the amount removed.

Businesses are seen as key helpers to achieving Race to Zero’s aims. Whilst the focus has been on large organisations (only 100 companies are responsible for 71% of global emissions), all business regardless of size can play their part too.

Committing to net zero also makes good business sense. Many benefits, from efficiency savings and gaining a competitive edge to future-proofing the business, can be gained by adopting the right approach. For small businesses, simple changes such as switching to LED light bulbs will help to reduce running costs. In addition, environmentally-friendly initiatives are often incentivised through grants or tax relief.

Sustainability Tax Incentives

Whilst many sustainability-related tax reliefs are aimed at larger business, there are some that are available to small businesses, for instance fuel duty and benefit-in-kind relief for company cars.

Often businesses can pay less tax by applying for schemes to help them demonstrate that they are operating more efficiently and producing waste that is less damaging.

Environmental Accounting and Disclosures

Currently, only quoted companies are required to report on their global energy usage and large businesses must disclose their UK annual energy use and greenhouse gas emissions. However, as all industries contemplate a sustainable future, many smaller businesses are also looking to voluntarily demonstrate their responsibility and commitment to climate change.

As the financial standards-setting process for climate reporting and disclosures continues to evolve, many issues remain unanswered, such as which information should be subject to voluntary vs mandatory reporting and whether climate reporting should form part of the management report or a separate sustainability report. What is clear for businesses is the requirement to fulfil its information needs for investors, shareholders, and its customers.   

Environmental, Social and Governance (ESG)

Any business serious about taking responsibility for its impact on the environment, the community and stakeholders should have an ESG strategy in place. Furthermore, it isn’t just relevant for individual investors, it is also important for any business that is looking for investment.

This type of investment should fit not only certain standards for environmental sustainability, but also demonstrate how the business manages its employees in terms of diversity and inclusion, and its social value and governance practices.

In October 2021 the UK government announced the launch of the Sustainability Disclosure Requirements (SDR). These are designed to help lenders, investors and consumers make clear decisions and form part of the "Greening Finance Roadmap to Sustainable Investing". Whilst currently applicable only to certain large companies, all businesses should be aware of the emerging trend of lending decisions being based on sustainability strategies and targets.

Unfortunately, ESG has led to an increase in the number of unsubstantiated or exaggerated claims about how environmentally-friendly an investment is – otherwise known as ‘greenwashing’. To counter this, the government set up the Green Technical Advisory Group (GTAG) to provide independent advice on this issue.

Task Force on Climate-related Financial Disclosures (TCFD)

Since the end of 2021 UK premium-listed companies are now required to report under the TCFD framework. With other companies expected to follow over the next few years, many are already adopting its recommendations, which set out four key elements:

Governance: the organisation’s governance around climate-related risks and opportunities.
Strategy: the actual and potential impacts of climate-related risks and opportunities on the organisation’s business, strategy, and financial planning.
Risk Management: the processes used by the organisation to identify, assess, and manage climate-related risks.
Metrics and Targets: the metrics and targets used to assess and manage relevant climate-related risks and opportunities.

SME Climate Hub

The UK government is urging SMEs to join the thousands of UK businesses tackling climate change by signing up to the SME Climate Commitment. Businesses of all sizes are invited, as even the smallest business produces carbon emissions, be it through its building, vehicles or supply chain.

Resources on Climate Change for Small Businesses

For Businesses in the Solent Area

The Solent Local Enterprise Partnership (LEP) provides a Sustainable Business Support Programme to help businesses with 1-250 employees based or operating in the Solent area create a Sustainability Action Plan, identify key risks and map the actions required to overcome them.

The LEP has also launched a new £5m loan fund – Building Back Greener. Open for applications until 14 January 2022, loan funding of between £100k and £1m for capital projects that can demonstrate a contribution towards achieving Net Zero that can start by the end of June 2022, with a view to being completed by March 2024.

More details can be found here

For Businesses in General

A guide to help small businesses calculate and reduce their carbon footprint is available from the FSB.  

An introduction to net zero for small businesses from the British Business Bank.

Article on supporting small businesses to take action on climate change on the CBI’s website.

UK Government guidance on how to measure and report your greenhouse gas emissions for small businesses

 

Links to websites mentioned on this page

Accounting for Sustainability

UK Business Climate Hub

UK Government – Environmental taxes, reliefs and schemes for businesses

Task Force on Climate-related Financial Disclosures (FCFD)

 

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