The government’s recent call for small businesses to lead the way on climate action is a timely reminder of the role that these firms have in helping achieve the 2050 net zero goal. The question is, how can they afford the investment needed to cut emissions?

The number of small businesses in the UK – at around six million – means that for the country to hit its decarbonisation target, it is imperative the sector takes meaningful action to reduce its emissions. The new Together for our Planet campaign, which is promoting the UK Business Climate Hub, is aimed at getting these firms to do so.

Why small firms need help with cutting emissions

Findings from a new study by the Zero Carbon Business Partnership illustrate why information on the subject and help with planning is necessary. According to the research, over 70% of businesses couldn’t recommend an online resource for help with decarbonisation and a third weren’t familiar with the term “net zero”. However, at the same time, the environment was ranked among leading concerns for the businesses surveyed.

Notably, the UK Business Climate Hub offers practical tools, resources and advice to help small business get a clearer picture of their emissions and to develop a plan to reduce them. Firms that commit to being net zero on the Hub will be recognised by the United Nations Race to Zero campaign.

Small businesses can take a host of practical steps to cutting emissions, from installing energy-saving light bulbs and introducing eco-friendly packaging to launching employee cycle-to-work schemes and switching to electric-vehicle fleets.

What is stopping small firms from taking climate action?

What is holding back small businesses with regard to decarbonisation? Tellingly, the Zero Carbon Business Partnership survey found that financial viability was a leading reason why firms hadn’t made more progress in cutting their emissions, alongside being unsure where to start and where to get help from.

This news is hardly a revelation. Going greener, restructuring operations and taking the steps outlined above requires investment, and right now, small businesses are fighting for their lives, working hard to generate income and achieve some stability. Understandably, decarbonisation is not a top priority. That said, it needs to be if net zero goals are going to be achieved.

So, how can small firms afford to invest?

Being aware of all small business finance options is vital, from government emergency lending schemes to the services of alternative lenders.

Funding net zero action and how alternative lenders can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services such as invoice finance, asset finance and peer-to-peer lending, are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme. Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Investing in decarbonisation and SME finance options

Despite the unprecedented pressures that small businesses are facing, they need to take action to cut their emissions as part of the 2050 net zero goal. And in many cases, this means reorganisation and investment. If firms are to do this, it is essential that they are aware of all the finance options available to them.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.