Over the last ten years, there has been an unprecedented international drive towards energy generation without using fossil fuels. This has stimulated a massive growth industry that has resulted in the huge reduction in the costs of materials, more efficient supply chains and better quality equipment. The end result is a much better output per unit installed, which has helped to change SME business owners’ perceptions on renewable energy as a viable option for their businesses, both for philosophical reasons and as a sensible economic decision.
But ultimately, everyone still needs to pay the bills and SME businesses have a tricky balancing act of helping to deliver the Government’s net zero targets whilst making the right economic decisions for their business.
In a recent survey, The Carbon Trust asked 564 UK SME business leaders about their views on energy efficiency, the challenges they face and the actions they have taken to reduce energy consumption. The key findings are detailed below:
Reasons to be cheerful
The findings of the research give cause for optimism with over 80% of SMEs surveyed taking action on energy efficiency and 51% saying they want to do more. Reduced costs, reduced energy consumption and improving the environment were identified as the main business benefits of becoming more energy efficient.
The most popular energy efficiency action to be implemented was the installation of LED lighting, followed by the installation or improvement of insulation/draught proofing and the monitoring and reviewing of energy usage.
While it is positive to note that one in two SMEs surveyed have upgraded to LED lighting, we are far from reaching saturation point for the take-up of even the most low cost and straightforward of energy efficiency measures. The research also suggests that encouraging SMEs to go beyond these to consider investing in other higher initial cost technologies will remain a challenge for some years to come.
SMEs are increasingly concerned about their energy spend. Over 60% of those surveyed said they were very or fairly concerned – up from 46% when we conducted a similar survey of SMEs in 2016. Decreasing energy consumption and social and environmental responsibility objectives are also important to them – though not as important as many other objectives, such as complying with legislation and achieving a strong financial performance.
Interestingly, however, many of the objectives that rank higher are likely to be impacted by climate change – risk management and becoming more customer-centric for example. The survey suggests that many SMEs are yet to fully appreciate the importance of climate change for their business and, linked to this, the need to focus on decarbonising objectives such as energy efficiency.
It may well be that customers will be the best conduit for influencing SMEs in this area. The survey found that SMEs are much more likely to be asked by customers/service users to reduce their environmental impact than three years ago (28% have been asked compared to 12% in 2016). This interest, in turn, significantly increased the perceived importance of energy efficiency for business survival and often motivated change within the business.
Support still essential
No matter what the driver, some fundamental barriers continue to prevent SMEs from implementing energy efficiency measures. A lack of resources (time and money) is by far the biggest of these. Even for engaged SMEs that are planning to implement an energy policy, a lack of time and money was cited by 46% as a barrier compared to 15% or lower for other barriers.
When asked what specific support they were looking for, access to funding and grants, training on how to become more sustainable and advice from local experts were top of the list.
So there remains a huge opportunity for SMEs to implement more energy efficiency measures but the case for them to do so still needs to be made and support measures are also still essential.
It may be that work from larger companies to decarbonise their supply chains, along with growing public pressure and perhaps some regulatory drivers, will have a decisive impact on many SMEs in the future. Ultimately, the need to act will grow as the climate emergency becomes more tangible for them and their customers.
Find the full report here
Sustainable initiatives can be good for business
What we are beginning to see now is that it’s not as hard as SME businesses may have thought to contribute and make changes that can reduce their impact on the environment. Making the right decisions can actually be good for business.
At Caplor Energy we believe that socially, everyone should be thinking more about the personal impact they are making on the environment, changing behaviour to consider things such as waste management and energy usage.
Encourage everyone to accept that there are real benefits in understanding environmental issues at all levels, but also start taking actions now to make a difference – it doesn’t have to cost a fortune to be sustainable, we all need to play our part with a hugely increased sense of urgency.