North Somerset Council (NSC) are undertaking the development of a roadmap and action plan focusing on measures to support local small and medium-sized enterprises (SMEs) to improve energy efficiency and reduce their carbon emissions. As part of the LGA’s Economic Growth Advisers programme, Eunomia Research and Consulting were commissioned to produce a report to assess the carbon emissions by sector as well as the challenges faced by sectors with the highest emissions in achieving net zero. The report would also make recommendations on support programmes that the council can develop to support SMEs reduce their emissions.
Eunomia were commissioned to provide a report which includes the following key aspects:
- A baseline analysis of North Somerset SMEs to help the council assess sectors by carbon emission intensity and climate change vulnerability.
- The challenges in achieving net zero and what the enablers would be for SMEs.
- An analysis of business support programme activities that North Somerset Council could implement which represent the greatest potential for positive impact.
- Recommendations for business support programme activities to support SMEs reduce carbon emissions – including short term quicks wins, alongside medium-to-longer-term actions, that could be achieved with further funding and support.
The research carried out by Eunomia to inform the recommendations have been carried out via:
- Desk research to build an evidence-base of practical approaches to the delivery of SME decarbonisation support services.
- Stakeholder engagement with local business support agencies and programmes, to understand gaps and opportunities for enhancing existing SME support provision.
- Interviews with established UK business support programmes, to understand lessons learned and key success measures for effective decarbonisation services.
The report identifies the key challenges faced by SMEs, business support providers and the public sector. Studies and publications available at the point of writing the report show that SMEs are still struggling with what net zero means in practice, and how to implement decarbonisation strategies putting them at the early stages of net zero transition. The report identifies particular constraints faced by SMEs in certain sectors of the economy:
- Cost was identified as being the greatest barrier to construction, accommodation, and food service SMEs.
- Feasibility-related challenges were more likely to be highlighted by manufacturing, retail, and transport and storage SMEs.
- Accommodation and food service SMEs more frequently mentioned capacity/willingness to act as being a key barrier to action.
Research also points to how cost savings alone are not a sufficient catalyst to action, and that other later stage barriers often interact to limit uptake and investment in decarbonisation measures, including:
- Challenges with quantifying and understanding financial savings emanating from energy efficiency improvements - potentially leading to the undervaluing of energy efficiency financial savings, and thus acting as a barrier to implementation.
- Leased or rented agreements – SMEs are often reluctant to invest in building improvements, particularly where the payback periods extended beyond their lease periods.
- Reluctance in disrupting or changing accepted practices - both in terms of internal operations and external customer expectations.
The role of business support agencies and public sector partnerships are explicitly identified as being gatekeeper organisations and enabling organisations to help small businesses make progress. Almost one in four SMEs (24 per cent) stated that more information from their local authority or Local Enterprise Partnership (LEP) would encourage their business to become more energy efficient.
The report presents key recommendations to strengthen and enhance the role of local and national support mechanisms including:
- LEPs taking more responsibility to deliver net zero messaging and signposting, whilst establishing a centralised resource for businesses to gather net zero information and support.
- Local and national government resources – including partnerships between business organisations and industry to increase support services to assist SMEs understand their situation and help them plan.
In addition, through research, Eunomia developed a detailed analysis of recommended business support interventions that North Somerset Council could deploy. Eunomia also identified many of the more established SME support programmes that seek to tackle both early and later stages to SME action on climate change, by offering a combination of support functions that focus on awareness raising and implementation support. The report suggests a list of business support interventions that could be explored by the council which could be combined with existing wider support functions. Both short term and long-term recommendations were made to deliver a higher impact over a sustained period.
Quick win short term interventions were recommended to increase awareness via signposting of existing toolkits and guidance, events and webinars - with no or limited funding required.
- Signposting - NSC can increase SME awareness of the climate agenda and help businesses take steps to reduce carbon emissions, by signposting existing information, guidance, resources and tools via the council website and social media pages.
- Events and Webinars - Events and webinars hosted by NSC with experts to support engagement with businesses.
Medium to long-term
Medium-longer term interventions were also recommended to ensure more sustained awareness raising such as through business networks and clubs. With further funding and resources, this could be combined with implementation support, through business advisors, consultancy and finance support.
- Business networks and clubs - Facilitating the creation of business networks and clubs to share best practice; support knowledge transfer on topics including net zero strategy for businesses; low carbon technology solutions and innovation; funding sources; case studies and best practice.
- Website and article content - Creating web content, with the objective of increasing SME understanding and awareness of the net zero agenda, providing guidance to help SMEs take action on climate change.
- Business advisors - Employment of business advisors dedicated to championing the climate agenda and supporting North Somerset SMEs with net zero transition.
- Developing new guidance - Commission the design and development of new guidance materials, covering a broad range of carbon reduction topics.
- Training and workshops - Commission the development of training courses and workshops covering carbon reduction topics.
- Consultancy support services for SMEs - Technical support services to help SMEs overcome specific barriers to action on climate change.
- Capital expenditure grants and loans - Provision of capital grants and/or loans to help SMEs overcome financial barriers to implementation of carbon/energy/resource efficiency measures.
As a result of the research carried out and the recommendations presented in the report, North Somerset Council has a clear action plan with detailed recommendations on business support interventions that can be delivered to support SMEs.
How is the new approach being sustained?
The recommendations presented in the report will inform a Climate Emergency Action Plan update which is currently in progress. Actions will be embedded within the Economic Development Service at NSC and progress will be monitored through North Somerset’s Economic Plan and Climate Emergency Action Plan.
The report highlighted the lack of local data to allow access to region specific information on carbon vulnerability of SMEs. However, through desk research and interviews with key stakeholders, the report is acting as a valuable research and initial step to further develop the council’s strategy to allow NSC to support local businesses on their journey to carbon reduction.
The report also highlighted the necessity of further development and implementation of delivery and service plans to reduce carbon emissions for specific sectors with the focus on transport and logistics.