External finance is among more than 20 barriers preventing businesses from acting on net zero, a major study has revealed.
The research, published by the British Business Bank (BBB), shows that small and medium-sized enterprises (SMEs) are prepared to reduce their carbon footprint, but face major challenges in doing so.
According to the latest statistics, small businesses account for almost a third of all current UK greenhouse gas emissions – including household, industry and Government – in the UK.
But major hurdles, including costs and information on how to reach net zero, are preventing firms from implementing a carbon neutral strategy.
The analysis of 1,200 SMEs identified 21 barriers preventing action, with general costs acting as the greatest hurdle for over a third (35 per cent) of small businesses. This was followed by feasibility, such as lack of control due to tenancy agreements or lack of appropriate technology, cited by 32 per cent of firms, upfront capital costs, cited by 21 per cent, and lack of information (12 per cent).
Furthermore, just over half (57 per cent) of enterprises have “heard a lot, or a fair amount” about the Government’s commitment to reach net zero emissions by 2050, while only a similar number (56 per cent) understand the implications of climate change for their business.
And just one in 10 (11 per cent) firms have accessed external finance, such as a loan or equity finance, to support their net zero strategy.
As a result, less than one in four (24 per cent) firms have implemented “comprehensive decarbonisation strategies, capabilities and actions”.
Commenting on the report, Catherine Lewis La Torre, CEO at the BBB, said: “Action to mitigate the impacts of climate change is at tipping point, and it is crucial for smaller business owners to feel empowered, informed and supported in making the relevant steps to decarbonising their business if the UK is going to meet its wider net zero objectives by 2050.
“More than half of smaller businesses say they’re not ready to prioritise decarbonisation, so clearly more needs to be done.
“The Bank continues to strive to bridge the knowledge gap and work with its partners to improve smaller businesses’ access to the right finance to help them transition to net zero. We hope this report encourages business owners to review their business model, consider where changes can be made and to make the necessary investments to secure a sustainable future for their businesses.”
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