Louise Bateman talks to David Caro, chair of the Federation of Small Business Environment & Energy Committee, about getting SMEs on a greener footing.
Q. In its second progress report, published last month, the Government watchdog the Committee on Climate Change concluded that not enough has been done to date to get small to medium-sized enterprises (SMEs) more energy efficient. Do you agree with this conclusion and if so why is that and what more can be done to change this?
A. I would tend to agree with the Government report – and there are several reasons for that. First, the Government has been focusing on big hits with easy targets. The big companies, such as aggregates – green up as many big businesses as you can. A lot of small companies, meanwhile, have been concentrating on getting through recession.
The potential for the SME sector to contribute to the fight against climate change is going to be bigger as energy prices rise – peak oil is going to be the stimulus for the SME sector to look at energy efficiency.
The biggest stimulus, though, is younger people who have an inbuilt climate change culture – the older generation is more interested in surviving and for them it is going to be the rising cost of energy.
The Carbon Trust has focused far too much on big companies. There are still barriers to accessing Carbon Trust loans – they are moving in the right direction and I have sympathy for the Carbon Trust, which only has a limited amount of money. But the disappointing thing is they’ve raised the criteria for CO2 loans from one and half tonnes saved to two and half tonnes. That makes life much more difficult for SMEs.
I think the Government needs to make 'going green’ make economic sense. One way of doing this is to finance neutral loans, where the Government will give interest-free loans, the 'pay as you save’ idea. When you replace parts of equipment – motors or compressors, you replace them with energy efficient ones, for example.
Q. The SME sector is the biggest economic sector in the UK and will have major role to play in the economic recovery. Therefore should more, not less, be being done to support small businesses' transition to a low carbon economy?
A. It is difficult to see where the money is going to come from to support greening the economy, but we need to give access to interest-free loans. It is a win-win situation for the Government because the money comes back and it reduces energy consumption at the same time.
Q. Innovation is synonymous with small start-ups. How much do you think the £34 million the Government is cutting from low carbon technology programmes is going to affect these?
A. This doesn’t chime with what the Government was saying when it was in opposition. Then it was saying "as far as we are concerned there will be no change [on green policy]". Again it comes backs to the availability of money, but to go on about a low carbon economy and then to cut funding to that sector it is shortsighted. Of course, it has to be balanced with what money there is, but you are not going to help a radical overhaul of R&D (research & development).
Q. What do you mean by overhaul of R&D?
A. We mustn’t ignore old industries, but we’ve also got to give support and encouragement to students coming out of universities setting up new businesses.
One of the gongs I beat everywhere is about the roll out of smart metering – there are 47 million new meters to be put in. Where are these meters going to be built? Where are the wind turbines going to be built? Why haven’t we helped Rolls Royce go down this direction? Rolls Royce is a perfect company.
R&D also has to be encouraged in the renewable sector with new students coming out of university without jobs. We have to be more imaginative with how we fund R&D with tranches paid throughout, not at the end.
Q. There is plenty of research to suggest that being 'green' is not a priority for small businesses. Is that what your members are telling you and if so, why is that?
A. That is not strictly true – we published quite a big ICM survey at the beginning of the year, which said that at least 50 per cent of our members have changed the way they operate their businesses because of climate change.
More and more of our small business members see there is a need to move in right direction; they are moving in the right direction because of energy costs, and if we have to beat the gong about energy costs rather than climate change, then so be it.
Q. What has and can the FSB do to support its members and small businesses in the area of sustainability and green innovation?
A. We are lobbying organisation and our current priority is with smart meter roll out – this is a once in a lifetime opportunity and it needs to be done right.
The Feed-in Tariffs are another area we are lobbying on.
Q. You recently announced that you were partnering with low carbon business charity the Mayday Network. Can you tell me more about this?
A. It goes right back to the first question. Large companies already have the knowledge of where savings can be made. They can feed that information into small companies that don’t have facilities for this sort of specialised mentoring. The supply chain is being fed the other way. They can put on lectures and courses and information within companies in the supply chain. There are benefits large companies can pass on and the cost savings can then be passed onto the customers.
In the last 12 months membership of the Mayday Network has doubled, but we need to put more publicity into it and explain it more to our members.
Q. What other green business action are you taking?
A. We promote any event we think is suitable for our members and we have a whole structure of magazines – a national magazine, regional magazines, and lot of branches have their own magazines.
Again it comes down to being a lobbying organsiation, we can pick up on this and pass it down.
We push the Carbon Trust and the Energy Saving Trust [to our members].
Q. The Government has set some tough carbon budgets to meet, but there are calls to make these even tougher, and in Europe the UK Government is actively calling for higher carbon emissions targets to be set. Does the FSB agree with this position?
A. We agree with it with reservations. It’s the Government’s right to decide, and it has to mindful of what Europe as a whole is doing. If we don’t want to make our businesses less competitive, a balance has to be struck. We still have to employ people and produce goods and maintain our position in world.
It is about proving to business that going green is good for the bottom line. This is one area that has moved forward – it’s in your interest to reduce your energy consumption. Using vehicles that are e greener, so that it gets into the psyche.
But do we look at carbon taxes on goods coming into Europe from other countries? This is more of a flag waving exercise, something we will consider if [other countries] are not moving in the right direction.
But Europe has to be careful – we have to do carbon reduction in a sensible way. It has to be done over a period of time that allows businesses to adjust.
Q. Under the Climate Change Act, the Government must introduce carbon reporting across all businesses by 2012 or provide a robust explanation to Parliament for not doing so. Do you think many businesses are aware of this piece of the law and will be ready for the change or do you think it's not practical to implement it?
A. Like much legislation, it’s been patchy and ill thought through. The Government has to think carefully how it does this. Not one size fits all. Big companies have special officers to do this. We have to be careful it’s not an administrative burden. Small businesses should be exempt and for bigger businesses we should make it easy to do. Environmental law already catches out businesses.
Q. What is the FSB lobbying for in this area on behalf of its members?
A. On carbon reporting, we are saying it’s a little too tight on timescale, serious thought has to be given if this can practically implemented in the timeframe. In a small company, the chairman is bookkeeper, services the machines, and does the compliance on health and safety. We have to make sure that its not one size fits all so there is flexibility on this. We are talking to ministers to not make it burdensome.
Like this? Please subscribe to our free weekly e-newsletter at the top of the page for more content like this
Related content: