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Rising costs hitting SMEs’ net zero transition

Andrew McRae

Andrew McRae: only a third of firms have an emissions plan

Rising overheads are stifling efforts by small firms to tackle the net zero agenda, says the Federation of Small Businesses.

More than three-quarters of small businesses (77%) say costs are up on this time last year, making it difficult for businesses to invest in measures to grow their operations or tackle their environmental impact.

FSB says this will hold back efforts to recover from the Covid crisis in a sustainable way. 

The findings are consistent with other evidence on the cost of turning green. The survey also follows a call from the Scottish parliament’s economy and fair work for Finance Secretary Kate Forbes to do more to help businesses make the transition to a green strategy.

This includes providing businesses with a “clear net zero road map”, backed by practical support and non-loan-based funding.

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In a separate report launched this week, FSB called on policymakers to launch a voucher initiative to help small businesses reduce their environmental impact. Dubbed ‘Help to Green’ the scheme would see businesses given grants of up to £5,000 to become more energy efficient.

Andrew McRae, FSB’s Scotland policy chairman said: “In the short term, we need to help firms manage the overnight spike they’ve seen in their bills. Next, we need to support local and independent firms to reduce the amount of energy they use.

“While smaller businesses know they have to take action, only a third of them have a plan in place to reduce emissions. Therefore governments in Edinburgh and London need to put together a package of help and support that helps firms move in the right direction.”

The new survey from the FSB points to a steeper fall in confidence among firms north of the border compared to other areas of the UK.

Its Confidence Index fell steeply to +1.2 points in the third quarter of 2021, from +20.5 points in the second quarter. The equivalent UK-wide figure fell to +16.4 points from +18.4 points over the same period.

This means the typical Scottish business is now less optimistic than the UK average, a reversal to the situation seen over the summer.

Mr McRae said: “Scottish business optimism bounced back over the summer but has slumped in the autumn. That’s partly because the easing of Covid restrictions delivered a big confidence boost that’s waned over time.”



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