Supporting SMEs to build back better

08 July, 2020

Tina Fawcett

Reading time: 3 minutes

Small and medium enterprises (SMEs), who account for three fifths of the employment in the UK private sector – are in danger of being overlooked as a source of environmental improvement, both in the short and long-term recovery.

As the UK plans its recovery from Covid19, there is considerable attention being paid to ‘building back better’. This idea encompasses delivering good quality jobs, reducing social inequality and improving the environment. Linking economic recovery with action on climate change has been supported by many different groups – business, politicians, NGOs, academics – and is shown to be popular with the public.

Most of the ideas and projects being promoted – from improvements to cycling and walking provision, to insulating the nation’s homes – are interventions in physical infrastructure. This makes obvious sense; these activities have the potential to deliver immediate opportunities for jobs, carbon savings, better living conditions, improvements in air quality and other benefits. However, it is important to think beyond the short-term, if long-term change and benefits are to be secured. CREDS researchers have proposed a transport stimulus package that identifies five sets of investment options, which go beyond immediate ‘shovel ready’ proposals.

Small and medium enterprises (SMEs) – businesses with less than 250 employees, who account for three fifths of the employment in the UK private sector – are in danger of being overlooked as a source of environmental improvement, both in the short and long-term recovery. Naturally, most current attention is on practical details about when businesses can re-open, and how to ensure the safety of staff and customers when they do so. Nevertheless, SMEs, their trade bodies, academics and government must also consider how the recovery agenda engages with and enrols this important sector.

Supporting SMEs to reduce the energy intensity of producing their goods and services will help them build back better. SMEs are collectively significant users of energy; they use around half of business energy. However, our research shows that SMEs have been largely overlooked by energy efficiency and energy demand policy in the UK and EU. Energy use and opportunities for energy saving in SMEs are poorly understood. While energy end-uses are similar to those in larger enterprises, SMEs’ capacity for paying attention to energy and responding to policy are different, as are their decision-making processes.

To help SMEs, we need both good policy design and good delivery of advice, information and financial support. Designing and delivering effective policy for this heterogenous group will require strategic segmentation and targeted interventions, in turn demanding improved data. Our paper sets out a research agenda to address deficiencies in data and evidence, and proposes a series of options for policy makers. There are existing business advice organisations and networks of expertise that can be enhanced to deliver environmental advice. This human (rather than physical) infrastructure is also an important immediate investment opportunity which can deliver economic and environmental improvement.

Beyond enabling SMEs to meet their business objectives with lower carbon emissions, we also need to start conversations about what sorts of activities they are undertaking. Which business need to adapt and find new and different opportunities, consistent with the transition to a low carbon economy? One way to do this is to use this toolkit which seeks to empower and enable SME advisors to engage SMEs in more meaningful discussions around environmental ethics and responsibility.

SMEs are a very important part of the UK economy and the post-Covid recovery. CREDS research describes how government can help them deliver better environmental outcomes in the short and long-term, a positive message, now more relevant than ever.

Banner photo credit: Sharon McCutcheon on Unsplash

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