A new report from the Federation of Small Businesses (FSB), in partnership with Zurich UK, highlights the urgent need for tailored support to help small businesses transition to net zero.
Despite 51% of small firms prioritizing sustainability, only 25% expect to reach net zero by 2050, according to the report.
Small businesses contribute 43–53% of the UK’s business emissions, but many lack the financial resources, skills, or knowledge to reduce their carbon footprint.
Only 13% report having adequate finances, 18% the right skills, and 26% the necessary knowledge to begin the transition.
The high upfront costs and long return on investment for green technologies are major barriers, FSB has found.
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Lower energy bills emerged as the top motivation for adopting low-carbon measures, chosen by 61% of firms—up from third place in 2021.
This shift reflects ongoing concerns about energy costs following the energy price crisis that hit many small firms hard.
FSB Policy Chair Tina McKenzie stressed that if given the right tools, small firms have the innovation and drive to power a greener economy.
She called for national expansion of successful schemes like the Business Energy Advice Service, which provides tailored support and match-funded grants for improvements such as solar panels and insulation.
FSB recommends extending government support to commercial properties, equalizing VAT rates for electric vehicle charging, and creating a joint task force to help landlords and tenants upgrade rented properties.
A standardized carbon accounting framework would also help small firms navigate compliance more easily.
David Nichols of Zurich UK added that while small firms want to reduce their emissions, this must be made affordable and practical through government support.
The report argues that empowering small businesses on the path to net zero is essential for both economic growth and environmental sustainability.
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