Small Business Carbon Emissions Statistics

What is the carbon footprint of SMEs, and how does this make them equally as important as large businesses in the UK’s fight against global warming?

Table of Contents

Accounting for 99.9 percent of all UK businesses, small to medium enterprises (SMEs) are crucial to whether the UK meets its 2050 net zero target.

Their collective contribution to UK business’s carbon footprint is significant, but often overlooked.

The fact is that statistically, SMEs share almost equal responsibility for greenhouse gas (GHG) emissions as large businesses.

SMEs have a huge opportunity to help the UK meet its Net Zero targets. Understanding how their current activity contributes to carbon emissions is the best starting point.

This report explores SME carbon emissions, their significance within a net zero UK economy, and helps business owners understand how their SMEs affect the environment. 

According to our analysis:

  • SMEs have a carbon footprint of at least 6 percent or 25.8 million tonnes / CO2e of total UK annual carbon emissions
    • This is equivalent to just 4.4 Tonnes per Small company – an incredibly conservative and low figure. The average adult in the UK has a carbon footprint of 12 Tonnes
  • Official statistics under attribute SMEs for their share of carbon emissions, holding them responsible for only a portion of their total environmental impact. Data is only available for Scope 1 and 2.
  • Almost all SME carbon emissions are generated from consuming energy within company buildings 
  • There is significant emissions data lacking making it difficult for the full scale of SME emissions to be attributed. 

British Business Bank

The British Business Bank have done more research which suggests between 43% and 53% of UK Business emissions come from companies with less than 249 employees. This accounts for up to 36% of total UK emissions!

*We’ve included the most recent data, but as the coronavirus pandemic continues to change business energy consumption, any data from 2020 onwards are provisional.

Example Footprints

Before we get stuck in, we’ve included some example real carbon footprints to give an idea of what they look like.

In the article we explore the sheer lack of data at a industry level for SME data, however we hope these give some context of what different businesses may look like.

Note how much Scope 3 accounts for their total footprint. In all examples, Scopes 1+2, which are most commonly reported, account for less than 25% of their emissions.

130 Tonnes

Digital Agency

70 Employees

31 Tonnes

Coffee Roaster

Roasts 15T of Coffee per Year

61 Tonnes

Jewellery Retailer

2 Retail Shops

Anonymous data supplied by C-Free. All figures are in CO2e.

All figures include Scope 1 and 2 emissions, and also include Scope 3 from a select number of sources*.

SMEs and the economy

SMEs are the bloodline of the UK economy. They make up almost the entire UK private sector and generate 52 percent of GDP.

When considering their sheer number, and the fact that their carbon emissions and GDP are almost equal to those of large businesses, it’s easy to see how underrated their environmental impact has been.

To date, all official emissions-reducing policies have been aimed at large industry. 

Even the most recent legislation, the 2020 Ten Point Plan, fails to address SMEs. 

This doesn’t mean that SMEs don’t want to change. According to a survey of over 1,000 SMEs and SME decision makers, 50 percent want more government support to become more sustainable. 

The latest announcement from climate science says that to meet our 2050 net zero goals, by 2035 the UK will need to cut carbon emissions by 78 percent of 1990 emissions (794.4 mt/CO2e). 

Regardless of whatever policies are introduced to meet the 2035 goal, it’s clear that they need to target SMEs, and that greater effort to influence sustainable changes within SMEs needs to be made by the government.

In 2020 of the 6 million UK private sector businesses:

  • 5.9 million were micro and small businesses (<50 employees) 
  • 36,100 were medium-sized enterprises (50-249 employees)
  • Large businesses (250+ employees) account for the remaining 0.01 percent of the private sector numbering around 7,800
  • Large businesses generate 48 percent of GDP

Number of SMEs across all sectors 2020

Industry Micro Small Medium Total
Agriculture, Forestry and Fishing  151,395 3,405  455  155,255
Mining and Quarrying; Electricity, Gas and Air Conditioning Supply; Water Supply; Sewerage, Waste Management and Remediation Activities  37,090  2,005  450  39,545
Manufacturing  259,845 21,120 6,240 287,205
Construction  972,925 16,910  2,095  991,930
Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles 510,065 36,735  5,100  551,900
Transportation and Storage  336,880 7,680  1,565  346,125
Accommodation and Food Service Activities  18,950  31,785  3,235  53,970
Information and Communication  369,090 10,040  2,065  381,195
Financial and Insurance Activities 87,550  3,285  970  91,807
Real Estate Activities 121,165 5,155  490  126,810
Professional, Scientific and Technical Activities 846,515 22,185 3,745  872,445
Administrative and Support Service Activities 504,270 16,890  4,165  525,325
Education  319,96  4,280  645  324,885
Human Health and Social Work Activities 355,775 19,960  3,695  379,430
Arts, Entertainment and Recreation 306,650 4,655  850  312,155
Other Services and Activities 358,17  5,775  375  364,325
Total 5,556,322 211,845 36,140 5,804,307
BEIS. Compiled by Small99

 

Source: BEIS

 

Source: BEIS

 

Image credit: Unsplash

Business GHG emissions

Business emitted 14 percent of the total 414.1 million tonnes / CO2e created within UK borders during the year.

*The UK government only records territorial emissions – emissions created within UK borders, not consumed emissions

Put into context, this is roughly the same amount of carbon sequestered by two-thirds of all forest areas in the United States each year.

Carbon dioxide is the dominant gas emitted, so the total amount of GHG emissions is represented as a carbon dioxide equivalent (CO2e).

*CO2e is a collective measurement representing the total warming effect of the various greenhouse gases in terms of the equivalent amount of CO2.

The other main GHGs emitted by business activity are:

  • Methane (CH4)
  • Nitrous oxide (N2O)
  • Chlorofluorocarbons (CFCs)

The Department for Business, Energy & Industrial Strategy (BEIS) holds businesses accountable for GHG emissions from:

  • Combustion within industrial/commercial sectors
  • Industrial off-road machinery
  • Refrigeration and air conditioning

SME energy demand outside of these activities is responsible for a further portion of total UK GHG emissions.

These extra emissions, however, are attributed to the energy supplier, and not businesses (more on net zero scopes here).

This means that the individual SME is only held accountable for a portion of the total amount of carbon emissions for which it creates both directly and indirectly. 

To better understand this, consider the resources that a cafe in the UK needs to make a coffee.

The coffee beans need to be grown, processed and shipped to the UK — all of these steps taking place in foreign countries. Then the cafe demands energy, which a power station produces.

All of these processes create carbon emissions. As BEIS attributes emissions to the sector that directly emits them, despite it being the cafe creating the demand for coffee and energy, the coffee producers (located abroad) and the energy sector (UK) will be attributed these emissions.

This important aspect of which sector carbon emissions are attributed to is referred to as scopes of emissions, and is explained in more detail here.

SME GHG emissions

The 14 percent contribution to 2020 overall UK carbon emissions came from businesses of all sizes and not only SMEs. 

SMEs contribute to this 14 percent through a number of activities, the main ones being:

  • Energy consumption
  • Driving company vehicles 
  • Waste sent to landfill

The vast majority of SME GHG emissions come from energy consumption. This makes energy consumption the most important aspect of SMEs’ environmental impact to regulate. 

By switching to a renewable energy supplier SMEs can do this and drastically reduce their GHG emissions.

Thanks to the increasing numbers of renewable energy providers, this can easily be done.

Calculated estimates cannot be made for SME vehicle and landfill emissions, but observations can. 

Construction firms are the most popular type of business in the UK, representing just under 1 million of the total 5.8 million SMEs.

By looking at what the government considers to be construction, it’s evident that some sort of vehicle is needed to carry out all types of construction work. 

As 99.9 percent of this most popular type of UK business are SMEs, which also highly likely use a company vehicle, a fair assumption is that SMEs contribute significantly to total UK business vehicle emissions.

Biodegradable waste sent to landfill breaks down releasing large quantities of methane (CH4).

Annual landfill methane emissions are currently estimated to be 17 mt/CO2e. 

This means that SMEs that generate biodegradable waste must also accept responsibility for some of the GHG emissions which are released from landfill sites across the UK.

 

 

 

Source: Unsplash

SME carbon emissions from energy consumption

Official GHG emissions data isn’t separated by business size. But analysing energy consumption data provides an alternative way of estimating SME emissions:

  • Almost all SME energy is used within company (non-commercial) buildings
  • 42 percent of SME non-commercial building energy consumption is electricity
  • SME energy consumption is an estimated 43 percent of all UK business energy consumption 

If all SMEs with company buildings ensure that their electricity is 100 percent renewable, then a chunk of 99 percent of the UK private sector could mitigate energy consumption carbon emissions (practically all SME GHG emissions) by 42 percent.

Assuming the average annual UK Small business (10-49employees) electricity use of 16,000 – 20,000KWh, an annual bill with a leading provider of 100 percent renewable electricity costs around £2500 – £3000.

This is equal, and in some cases cheaper than an annual electricity bill from a provider which cannot guarantee 100 percent renewable electricity. 

Increased government incentive to switch to renewable energy providers would be beneficial. 

However, with 100 percent renewable electricity prices already economically viable, SMEs can take comfort in knowing that by making the switch they wouldn’t be out of pocket. 

Businesses consume energy for both industrial processes and within non-commercial buildings. 

  • 2020 Total UK business energy consumption was 29 percent (489,000 GWh) of total UK energy consumption 

SMEs don’t represent enough of the industrial sector to be attributed industrial energy consumption. Industrial process energy consumption is, therefore, disregarded.

  • Total 2020 non-domestic building energy consumption of 255,000 GWh created 60 million tonnes CO2e of carbon emissions

 

 

 

Source: BEIS

 

 

 

Source: BEIS

  • Leaving the remaining 45 percent (53,000 GWh) of overall SME energy consumption (111,000 GWh) for this period to Scotland and Northern Ireland.

 

 

 

Source: BEIS. ‘Total’ column calculations by Small99

 

 

 

Source: BEIS. ‘SME’ column calculations by Small99

 

 

 

Source: BEIS. ‘SME’ calculations by Small99

Methodology and limitations 

To better understand the scale and impact of SMEs on emissions, our initial aim was to show statistics clearly separated by micro, small and medium sized businesses, respectively.

However, official government data is almost never separated beyond SMEs collectively and large businesses. We responded by changing the scope of our analysis to SMEs as a whole. 

The government uses several reports with differing methodologies to calculate GHG emissions. 

This can be problematic:

  • Some reports cover the whole UK, others only England and Wales
  • Different figures for the same GHG emissions can also be reported depending on the report from which data is taken, and how it is combined with data from other reports.

These limitations highlight that GHG emissions data is never 100 percent accurate.

It’s almost certain that official data underestimates the full extent of UK SMEs contribution to global warming. This is especially the case where often government data focuses on emissions generated (such as by domestic electricity production) and not emissions consumed (such as from the sale of imported products).

For the individual small business owner, underestimation of your operation’s emissions further highlights the importance of making energy efficient and carbon-emissions reducing changes as soon as possible. 

Final takeaways 

For SMEs to effectively reduce their carbon emissions individual business owners must take action. 

Understanding your business’s carbon emissions and treating them as a budget with limits, much like finances are, is important, but also only the first step to begin improving your SME’s environmental impact.

The fastest and most high-impact way to immediately begin mitigating SME carbon emissions is to switch to a 100 percent renewable electricity provider.

Use our carbon scorecard app to assess your business’s environmental impact and begin reducing carbon emissions today, or let our partner switch energy for you.

Sources

Carbon emissions

  1. https://www.gov.uk/government/collections/final-uk-greenhouse-gas-emissions-national-statistics
  2. http://randd.defra.gov.uk/Document.aspx?Document=12439_WR1908ReviewofMethaneEmissionsModelling.pdf

Energy use

  1. https://www.gov.uk/government/consultations/helping-businesses-to-improve-the-way-they-use-energy-call-for-evidence
  2. https://www.gov.uk/government/consultations/energy-efficiency-scheme-for-small-and-medium-sized-businesses-call-for-evidence
  3. https://www.gov.uk/government/collections/energy-consumption-in-the-uk
  4. https://www.gov.uk/government/publications/business-energy-statistical-summary 
  5. https://www.economy-ni.gov.uk/publications/energy-northern-ireland-2018 
  6. https://www.gov.uk/government/consultations/energy-efficiency-scheme-for-small-and-medium-sized-businesses-call-for-evidence

Electricity price comparison

Case Study Sources

Digital agency 

70 employees

Annual carbon footprint – 130 tonnes of CO2e

This includes all scope 1 and 2 emissions, and scope 3 from the following sources:

  • Transmission and Distribution of electricity
  • Web Hosting
  • Working From Home
  • Business travel
  • Employee commuting 
  • Use of online services
  • Purchased Items
  • Waste
  • Water

Coffee Roaster

15 tonnes of coffee per year

Annual carbon footprint – 31 tonnes of CO2e

This includes all scope 1 and 2 emissions, and scope 3 from the following sources:

  • Transmission and Distribution
  • Green Coffee Purchasing 
  • Packaging
  • Deliveries
  • Logistics
  • Employee commuting 
  • Purchased Items
  • Waste
  • Water

High Street Jewellery Retailer 

2 shops

Annual carbon footprint – 61 tonnes CO2e

This includes all scope 1 and 2 emissions, and scope 3 from the following sources:

  • Transmission and Distribution
  • Travel and Deliveries 
  • Packaging
  • Employee commuting
  • Purchased Items
  • Waste
  • Water

Alan Palazon
Author: Alan Palazon

Still Have Questions?

Join the community!

Connect with other business owners on their journey, get matched with experts and receive 1:1 support on your challenges. 

How to Avoid Common Net Zero Mistakes

Changing the way you make decisions will have far more impact than any single decision you make.

We outline the common mistakes people make to keep you on the right track with your net zero journey.

How much is a Tonne of CO2?

Our guide highlights the financial cost of creating carbon emissions from natural gas use, and how much money your business can save by reducing them.

What is Net Zero?

We provide small businesses owners with some definitions and guides on what Net Zero means for them, and how to achieve it.