Tuesday May 27th 2025
Guy Hinks, FSB Scotland Chair.
Written by Midlothian View Reporter, Luke Jackson
A major new report from the Federation of Small Businesses (FSB) in partnership with Zurich UK, New Growth: How to support small businesses to cut carbon and costs on the road to Net Zero, published today, finds that half of small businesses (51%) say that sustainability is a high priority for their business.
While nearly two-thirds of small firms (64%) think that sustainability should be a high priority for government, less than a quarter (22%) of those in Scotland expect to transition their own business to net zero by 2045.
The Scottish Government has committed to the country reaching net zero emissions by 2045, five years earlier than the UK Government.
The New Growth report sets out practical steps which can be taken by Scottish and UK Governments, as well as local authorities, to support small businesses in the transition to net zero.
With small firms making up somewhere between 43 and 53 per cent of the UK’s business emissions, there is clearly a mismatch between their expectations of preparedness for 2045, and the work that will be needed to get them there.
Two in five small firms (38%) cite a lack of capital as a barrier to transition, while a third (33%) say the return on investment for green tech is too long.
Only one in eight small firms (13%) say they have the appropriate finances to transition to net zero, while under a fifth (18%) say they have the right skills to make the change, and only a quarter (26%) have the right knowledge.
Lower energy bills were the most popular incentive to get small firms to install low carbon improvements, selected by three in five small firms (61%). When FSB asked small businesses a similar question in 2021, energy costs only made third place.
Tina McKenzie, FSB’s Policy Chair, said:
“The incredible inventiveness and entrepreneurialism among the small business community will be a powerful tool when it comes to cutting carbon, growing the green economy, and hitting the country’s net zero targets – if small businesses are given the tools and support they need to thrive.
“Many small firms still bear deep scars from the energy price crisis, which saw their energy bills rocket by three-, four-, or five-fold – or even more. Having seen too many of their peers not make it through the crisis, it’s not surprising that they are looking for ways to become more energy-independent.
“The sustainable economy has absolutely enormous potential for growth in coming years. This is growth that we as a country need, and small firms must be given the chance to benefit from the opportunities on offer.”
Guy Hinks, FSB Scotland Chair, added:
“While small businesses in Scotland recognise the importance of net zero, less than a quarter expect to reach that target for their own operations by 2045.
“By reviewing their delivery plan and offering tailored support, the Scottish Government can help to restore confidence among small businesses in their ability to transition to net zero by 2045.”
Measures to help all small firms cut carbon and costs
– The Scottish Government should review its delivery plans in relation to the transition to net zero to improve confidence among small businesses.
– Local Authorities in Scotland should incorporate small business waste collection services into their domestic collection services, with the costs for these waste collection services included in business rate charges.
– The Scottish Government should relaunch its Microgeneration Certification Scheme (MCS) fund to strengthen heat pump supply chains.
– Future solar panel grant support offered by government should be available to commercial properties as well as domestic properties.
– The current VAT zero rate for installing energy-saving materials should include commercial premises, and the VAT on electric vehicle charging – currently five per cent for private homes, but 20 per cent for public facilities – should be equalised at five per cent.
– A standardised carbon accounting framework promoted by government would simplify compliance for small firms, as would providing carbon accounting information on business consumers’ energy bills.
FSB’s Tina McKenzie added:
“There are solutions to help small firms cut carbon and cut costs, from zero emission vehicles to energy efficiency to ensuring small businesses have the know-how and the right support to future-proof their operations and bolster their margins at the same time.
“The world is changing rapidly, and the Government and the economy as a whole cannot afford for the UK’s 5.5 million small firms to be left behind, excluded, or bogged down by changes to policy and regulation.
“Smart thinking about how to make net zero practical and affordable for small firms will unlock economic growth along with lower emissions, so will be more than worth the effort.”
David Nichols, Head of Retail at Zurich UK, said:
“It is clear from our customer feedback that small businesses are facing multiple challenges at the moment with further economic pressure on them. Whilst these businesses clearly want to do the right thing in their journey to net zero, it has to be made as easy and cost-effective as possible for them, coupled with complete support from the Government.”
Read the FSB report in full New Growth: How to support small businesses to cut carbon and costs on the road to Net Zero
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