25 Aug 2021
Analysis by *The Guardian* has revealed that the UK's low-carbon economy is worth over £200bn – four times more than the manufacturing sector. Experts agree the sector has the potential to tackle climate change and create sustainable jobs. However, they also warn that the UK can only make the transition to a low carbon economy if everyone supports a “national programme of transformation” – including SMEs.
The UK’s green economy, which employs over 1.2 million people, is currently made up of more than 75,000 businesses, ranging from wind turbine manufacturers to recycling. Funding Options has met some of the UK’s most exciting new green startups through the Great British Entrepreneur Awards (we’re sponsoring the sustainability category this year).
The low carbon sector grew by 7.4% during the financial year 2018/19 to 2019/20. It shrank by -9.0% during 2019/20 to 2020/21, but is likely to bounce back in the post-Covid recovery.
GBEA finalist Verto Homes is the UK’s first housebuilder to specialise in the design, build and sale of smart homes which produce zero carbon emissions.
Although green businesses are on the rise, experts warn that an “all hands on deck” approach is needed if the UK is to meet its ambitious carbon targets.
Professor Patrick Devine-Wright of Exeter University (and a lead author with the IPCC) said the way in which we live our lives needs to change, including the way we heat our homes, what we eat, how we travel and where we work.
“We need nothing less than a societal process of transformation in place alongside this vision of new technology, devices and infrastructures,” he said. “Unless we connect all those dots up, I don’t think it is going to happen in the timescale that is required.”
Currently, the low carbon economy is ad hoc in nature, with certain sectors and parts of the country speeding ahead and others lagging behind. Experts are calling for the government to set out a plan to avoid existing inequalities becoming entrenched.
Hannah Martin from the campaign group Green New Deal UK admitted there’s “a rich tapestry of climate focused community activity” with “people coming together to build resilient communities that will be the blueprint for how we live in the future”.
But she also warned “change at the community level cannot be done in isolation from a holistic strategy at the speed and scale required from the central government, which must both provide the regulatory support and finance required for local communities to innovate and create responses to the climate crisis that are unique to their situation and experience."
Nick Molho is the executive director of Aldersgate Group, an alliance of leaders from business, politics and civil society that drives action for a sustainable economy.
He called for a UK-wide body to “support the workforce as the UK economy moves to net zero emissions” backed by local transition bodies made up of local industry, government, unions, and educational sector representatives.
Although progress is clearly being made towards the cultivation of a low-carbon economy, it’s not happening fast enough. If we’re to reduce emissions by 78% by 2035 and reach net zero by 2050, we need to have the right infrastructure and funding in place.
Clearly, there’s an appetite for green products and services. As well as support from the government, the finance industry needs to step up and demonstrate its appetite – and ability – to fund green businesses and green business initiatives.
It’s our belief that the SME lending market has a significant part to play in helping businesses become carbon neutral. UK SMEs currently account for around 25% of the CO2 emissions, and to implement green projects at speed and scale, they require access to green finance.
We’re helping businesses source the right funding to achieve their sustainability goals through our new Green Finance Marketplace, which connects businesses to the funding they need to reach net zero. A number of lenders are already on board, including Swishfund and Cambridge & Counties Bank.
Our vision is to promote transparency and awareness of green finance options for SMEs. Financial projects are increasingly rewarding companies that are committed to reducing their carbon footprint, so it’s an exciting time for business owners to set their green plans into action.
SMEs can use our platform to access green funding to facilitate the purchase of green assets, including solar panels and clean vehicles.
The Green Finance Marketplace benefits lenders too. We match lenders with businesses that demonstrate strong environmental credentials (for example, by taking part in renewable, low/zero carbon or sustainable activities).