There is an increasing enthusiasm and desire for embracing sustainability amongst Small and Medium-sized Enterprises (SMEs). This was evident at the launch of the Southwark Climate Collective (SCC) initiative, a project pioneered and coordinated by Better Bankside and funded by the UK Shared Prosperity Fund.
Within just four months of opening applications, 160 SMEs from Southwark signed up, with many more joining the waiting list, all eager to decarbonise their operations and reap the associated climate and economic benefits.
Sadie Hodgson, Sustainability Manager at Business Improvement District (BID) Better Bankside explains more about the challenges being faced by SME's when it comes to sustainability reporting.
Despite the enthusiasm however, keen SMEs are facing a significant "Intention Gap" when it comes to decarbonisation. While the desire to become more sustainable is strong, smaller enterprises often lack the time, skills, and resources to implement effective changes. There is also insufficient support at a regulatory level, and we see this nowhere more keenly than in the area of sustainability reporting. Change is coming when it comes to sustainability reporting and lack of clarity and support around this threatens to leave SMEs both unprepared and jeopardise their future business success.
The Impending Regulations: A Call for Clarity
SMEs are currently in the dark regarding new sustainability reporting regulations. There is no clear regulatory framework or timeline, leaving them vulnerable and at risk of being excluded from lucrative contracts that require sustainability reporting compliance, particularly in relation to scope 1, 2, and 3 emissions. Without the ability to meet these requirements, SMEs could miss out on significant tenders – especially those for the largest contracts.
Addressing the SME Gap: A Call for Support
Larger corporations have the resources and expertise to navigate the complex landscape of sustainability regulation. In contrast, SMEs struggle with internal limitations. Initiatives like Grow London and the Business Climate Hub aim to support SME sustainability, but often fall short, focusing more on audits than on the steps needed for long-term change.
The SCC initiative has found that tailored support addressing the specific and diverse needs of individual SMEs is crucial. One-to-one support, knowledge sharing, and upskilling are essential components of overcoming barriers to sustainability delivery. Closing the current support gap is paramount to empowering SMEs on their sustainability journey.
The Path Forward: Supporting SMEs Amidst Reporting Uncertainty
While urgent clarity and guidance on upcoming regulations are needed, a multifaceted approach should be employed to support SMEs in the interim. Building confidence around sustainability reporting can be achieved through decarbonization work which is measurable. The SCC programme provides SMEs with a comprehensive audit of their business operations, which informs practical steps to improve energy efficiency and sustainability performance.
This approach helps break down initial barriers to reporting by providing clarity on underperformance against key sustainability measures and offering a clear pathway for improvement.
Fostering partnerships between SMEs and technical experts is also crucial. Bringing in accounting and auditing expertise can support SMEs in their sustainability reporting, while a community approach involving other small firms and business partners can help address internal resource limitations.
Embracing SME Decarbonisation - A Collective Endeavor
As the global imperative for business decarbonisation and Net Zero intensifies, SMEs stand at a pivotal crossroads. The lack of clarity around forthcoming sustainability reporting regulations underscores the need for concerted action to support SMEs. Given that smaller businesses make up 90 percent of London’s business ecosystem and are responsible for 40 percent of the UK’s non-domestic emissions, supporting SMEs in their decarbonisation efforts is not just a "nice to have" – it is essential.
The SCC initiative, which brings together a powerful cross-borough partnership, has demonstrated that creating SME communities providing a supportive ecosystem can tackle the complexity of decarbonisation and address the resourcing issues that limit change. By empowering SMEs with the necessary tools, guidance, and collaborative partnerships, we can ensure they are not left behind in the evolving landscape of sustainability reporting.
As SMEs make up 99.9 percent of the business population in the UK, their role in achieving broader sustainability goals cannot be overstated. Empowering them to understand and meet new regulations is crucial for climate change being addressed by the whole business community and achieving a truly sustainable future.
The Southwark Climate Collective (SCC) project, provides free decarbonisation support for 160 SMEs within the borough of Southwark. Bringing together a powerful, cross-borough partnership of Team London Bridge, Southwark Council, The Blue Bermondsey and Elephant and Castle Business Forum, led by Better Bankside, the SCC pools resources, advice and business relationships, to help SMEs decarbonise their operations in four areas: energy, waste, freight and supply chains, with the aim of a 1,204 tCO2e reduction in carbon dioxide emissions by March 2025.
The project has been funded by a £653,000 grant from the Mayor of London as part of its UK Shared Prosperity fund (UKSPF) and is in response to specific challenges faced by SMEs when it comes to the decarbonisation of their businesses.
New applications for the programme are now closed, but SMEs can access additional resources to support the decarbonisation of their own businesses here
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