1.4. How will responses vary depending on the size of business?

The starting place for any business in managing climate impacts is awareness. Once the business understands the role that it plays in the larger community, and how it affects the environment, any business can develop a climate-management plan tailored to its own needs and situation, gaining business value at the same time. The business may be part of a larger supply chain, where greenhouse emissions have to be calculated and accounted for.

Small and medium enterprises (SMEs) are a vital part of UK economy providing local employment, innovation and inclusion. They provide local employment, goods, services and help cement communities together). The number of SMEs is growing, mostly in the industries of construction, leisure, internet retail, delivery services and real estate.

Many SMEs see climate change as a global problem, not as threat to themselves. For example many do not hold insurance, but they can take up to two years to recover from flood, and some do not survive. Only a quarter of SMEs in UK think climate change is a problem for them.

It's hard to measure climate impact on a small scale and so SMEs often do not identify their role. But even small contributions can accumulate. SMEs use around 50% of total UK business energy and are responsible for half of all business carbon emissions. While the business may only produce few direct greenhouse gas emissions, it has an indirect impact on climate — energy use, transportation, and other everyday activities. ‘Electricity, heating, cooling, machinery, office equipment, chemicals, wastes of all kinds, and transportation all translate into energy use that contributes to climate change, and business opportunities’. There are more than 50 'clean energy' companies quoted on the London stock market.

Typical reactions of small businesses to flood disaster for example include:

• Home working or flexible working;
• Review of commercial insurance;
• Review of ‘weather proofing’ and weather risks to premises;
• Obtaining advice from government and external bodies;
• Relocation.

Taking proactive steps to reduce energy consumption and emissions can be expensive up front. There may not be the time to wait for the return on the investment. But even small ‘free’ steps help e.g. turning off lights or computers when not in use.

The Climate Change Levy (a tax on companies who use fossil fuels and is aimed a reducing pollution) has a larger effect on small companies. The relative cost of switching to cleaner fuels is high for SMEs, who cannot afford to change or alter equipment, thus forcing them to reduce the amount of energy they use which may risk harming the business.

For larger businesses the cost is proportionately lower, and in many cases, these companies have managed to negotiate huge reductions to the levy by promising to change production methods. Here climate change also sits low on the agenda.

The FTSE 500, taken as a whole account for nearly 15% of all global emissions by humans, but only 10% prioritise global warming. Money dictates the higher priorities of cost reduction, emerging markets and new products. It is however the large businesses who are in a better position to lobby the UK government.

The UK Corporate Leaders Group on Climate Change (UKCLG), consists of the leaders of eighteen major UK companies (including B&Q, BAA, Centrica, E.ON, LloydsTSB, Shell, Tesco and Vodafone) and supports the Climate Change Bill which calls for a ‘comprehensive package of policy measures to change every major sector of the economy’ to achieve ‘year on year reductions in emissions’. The group argues that ‘if the UK is to be a global leader in green business then government and business must work together to achieve real change by delivering new projects and business best practice in order to create a low-carbon economy’.

Taking a global perspective the picture looks a little better. More than 250 of the world’s largest companies are actively operating greenhouse emission reduction schemes.

Additional information can be found on these websites:

• ‘Small business must “wake up to climate change”’ [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] ;
• Small Business Journey;
• ‘The climate change threat to your business’;
• ‘Big business bosses on climate change action’.