On the eve of COP26, attention is firmly focused on the climate challenge and the need for action by governments, big business, and households. Yet there will be no transition to net zero without small and medium sized enterprises (SMEs).

Why would small business leaders adopt net zero practices?

Many SMEs are still reluctant to transition to green business models: viewing investments as costly, not fitting with the traditional business model and contradictory to business performance. Is this true?

A recent report by the Enterprise Research Centre shows that it is not necessarily a trade-off. A small business can contribute to the climate emergency agenda without compromising its own growth. This is a win-win situation where business objectives are compatible with environmental goals.

Increasingly, environmentally aware consumers are demanding low carbon products and services. If business is up to the challenge of meeting this new demand – it will thrive. Consumer demand is one of the most potent driving forces encouraging businesses to adopt net zero practices along with the positive attitude towards the environment of business owners and managers. With a new breed of entrepreneurs starting out with green models and technologies, established entrepreneurs cannot afford to stand still.

And still, introducing environmentally friendly activities and innovations may be overwhelming for a time, and resource, constrained entrepreneur. Where to start? Probably, the most obvious answer to this question would be ‘start small to go big’. Happily, low-cost solutions are easily available to help them on their way.

Even simple organisational changes, prompted by environmental reports and audits for example, may help a small business to measure and recognise its environmental impact. These assessments will not only help pin-point potential areas for further intervention but also improve communication with consumers who are increasingly looking for transparency and educated choices. Investing in training on environmental matters may not only allow small businesses to enhance knowledge of employees regarding net zero but also spur their innovativeness and entrepreneurial mindset, driving benefits for the environment but also benefits for the business itself. Small firms can be at an advantage due to their size and ability to pivot more quickly than larger firms.

What are SMEs already doing to contribute to the net zero agenda?

Despite the many difficulties since the start of 2020, many UK SMEs are engaged with the net zero agenda. And they do it in different ways depending on the particularities of business and industry. For example, around one in three businesses have already switched to more renewable energy and two in five introduced some changes to production or distribution processes to make them more resource efficient.


The full blog authored by  Professor Mark Hart, Dr Anastasia Ri ,Dr Effie Kesidou was published by the OECD and is available here