Opinion: Small businesses will have to think about energy efficiency

  • 07 Apr 2020

By Julie Hirigoyen, Chief Executive of the UK Green Building Council

The pressure is growing on small businesses to take tangible steps to improve the energy efficiency of office premises.

The climate crisis has rocketed to the top of the agenda for many businesses – and small or independent business is no different. Solutions include reducing travel through video-conferencing technologies, ‘greening’ transport fleets, working with environmentally conscious suppliers, rethinking and reducing waste, and nourishing a culture of sustainability. The biggest impact a small business can make, though, is by increasing energy efficiency within office premises.

Small businesses may resist investment in energy efficiency initiatives, owing to a range of factors:

  • Energy costs may represent a small percentage of overall costs (between 1 and 5 per cent)
  • A lack of knowledge about, and experience of, increasing energy efficiency
  • Energy efficiency is not aligned with targets and aims 
  • Capital financing for SMEs is usually applied towards investment in essential overheads and equipment, not necessarily energy efficiency 

     

     

  • Landlords don’t bear the cost of energy bills, and tenants’ lease lengths are often shorter than the payback periods on energy investments
  • Most SMEs are time-poor and lack the capacity or skills to implement efficiency projects.


The UK needs a comprehensive and integrated package of policies to tackle these challenges; those in place are piecemeal and suffer from frequent chopping and changing. Where we do have policies, such as Building Regulations and the Minimum Energy Efficiency Standards, there are enforcement problems. 

We need to focus on policy interventions, regulations and incentives that increase the importance of energy efficiency and motivate entrepreneurs to seek information. The information exists, as does a range of financing products. But to inject a much-needed sense of urgency, the biggest problem to overcome is inertia.

Sustainability and commercial success go hand in hand. Certain drivers are more likely to spur action from small business: for instance, B2B networks and supply chain partnerships can be influential and are most effective where sectors are well organised through industry and trade bodies. These must be leveraged to share and celebrate good practice. 

In addition, external drivers of reputation and market positioning are likely to become more significant in the years ahead – especially for businesses that deal directly with the public, or a customer base that is demanding meaningful commitments to sustainability and transparent reporting. And let’s not forget that younger workers are increasingly seeking employers whose values align with their own, with environmental sustainability at the forefront.

 

 

With climate change no longer a fringe issue, targeted information and practical solutions are now readily available to the small business audience. Government policy is catching up to incentivise energy efficiency, and is targeting net-zero carbon by 2050.

Financing options are available. 

Some small businesses may be reluctant to tackle this crisis, but it’s likely that this will become a pre-requisite of doing business, rather than a ‘nice to have’. 

Julie Hirigoyen is Chief Executive of the UK Green Building Council. Views expressed are those of the author and not necessarily those of FSB.

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