SME Governance for Net Zero ('GoZero')

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This UKERC-funded research project aims to provide a robust evidence base to support the multi-level governance of SME decarbonisation across the four UK nations. It will examine current policies, consult SME owners, managers, and policy makers, and seek to identify the key changes needed to facilitate the large-scale decarbonisation of the UK’s SME population over the coming decade.

The project partners are: The University of Oxford (Dr Sam Hampton and Dr Katherine Sugar), The Open University (Prof Richard Blundel), and Sheffield Hallam University (Prof Will Eadson). The research team will also collaborate with a number of local business support and policy-based organisations in the England, Wales, Scotland, and Northern Ireland. The GoZero project is also linked to the Centre for Social and Sustainable Enterprise (CSSE) in the Faculty of Business and Law and is supported by the OU’s knowledge exchange teams in Cardiff and Belfast. The project was launched in September 2022 and is scheduled to conclude in May 2024.

Background

Cardiff bay

Small and Medium-sized Enterprises (SMEs) are essential, yet largely neglected actors in the governance of the UK’s energy transition. Collectively, SMEs consume about 50% of commercial and industrial energy, but are exempt from many business-focused energy and decarbonisation policies.

Policies targeted at smaller firms tend to focus narrowly on short-term financial incentives and provision of technical advice. Most schemes are administered and delivered locally, resulting in a patchwork of approaches taken across the UK, with limited coordination and variable success.

As a result, SMEs often struggle to find reliable, relevant information on pathways to achieving Net Zero, while policymakers find it difficult to respond effectively given the sheer heterogeneity of the SME population and the relatively informal nature of firm-level decision-making.

The unprecedented energy price increases of the early 2020s are creating an existential threat to many smaller businesses. Awareness of the threat of climate change is also growing, bolstered by recent experiences of extreme weather events. This growing appetite for action in the business community has highlighted significant limitations in the existing governance arrangements.