What is a net zero plan?

In this post, we explain what you need to know about net zero plans, why they’re important for SMEs, and how you can start making one.

There’s no shortage of resources available online to help the owners of small businesses on their journey to net zero emissions. In fact, there’s so much out there, that you might not know where to start. We understand how this might feel overwhelming. With an effective net zero plan, your life will be made far more simple and you’ll be able to demonstrate progress to suppliers, customers and stakeholders alike.

In this post, we’ll take you through everything you need to know about net zero plans, why they’re so important for SMEs, and how you can make one for your small business. 

What is net zero?

If you’re interested in net zero plans, then it’s likely that you already understand what the term ‘net zero’ means. Nevertheless, it’s important that you are 100% clear on its definition, as it differs quite significantly from other key terms, like carbon neutrality.

Net zero means the achievement of a balance between the amount of greenhouse gas (GHG) emissions that your business produces and the amount that it removes from the atmosphere. This is also sometimes called ‘climate neutrality’, meaning that your business has no net impact on the climate.

Image credit: Unsplash

What’s the difference between net zero, zero emissions, and carbon neutral? 

Net zero refers to GHGs, which are the gases that are responsible for global warming. These include, but are not limited to, carbon dioxide, methane, nitrous oxide, and fluorinated gases

On the other hand, carbon neutrality refers only to carbon dioxide emissions. It means that your business makes no net contribution to global carbon emissions. A net zero goal is, therefore, more far-reaching and expansive than a carbon neutral goal. 

For example, imagine turning on the engine of a petrol car. When running, this generates carbon dioxide emissions, but also produces nitrous gases, sulphur, particulates, etc. Carbon neutrality would only count the CO2 emissions, while net zero concerns the total impact of running a vehicle. 

Another key difference is that net zero requires a 90% reduction in your emissions by 2050, and a 50% reduction by 2030, based on a lot of corporate standards such as the Science Based Targets Initiative (SBTi). This requirement clearly sets net zero apart from carbon neutrality, which you could in theory reach through offsetting alone. 

What net zero doesn’t mean is cutting your emissions entirely — this is what is referred to by the term ‘zero emissions’. Instead, net zero means significantly reducing your emissions and offsetting those that you can’t reduce. The amount that you offset should ideally count for only 10% of your existing footprint  (otherwise known as your “baseline”). 

Why are net zero action plans important for small businesses?

Businesses urgently need to set net zero targets if we are to curb climate change. This principle was established by the 2015 Paris Agreement, which stated that balancing GHG production with GHG removal was crucial to limiting the increase in global temperatures to 1.5℃ above pre-industrial levels. 

Closer to home, planning to reach net zero will help the UK in its aim of reducing emissions by 78% by 2035 and reaching net zero by 2050. Depending on where you are in the country, you might also be affected by more ambitious local targets — for example, Edinburgh, Bristol, and Birmingham aim to hit net zero by 2030

If this isn’t compelling enough, it’s likely that your small business will need to take action to comply with customer and supplier pressures, as well as new laws. For example, the Sustainable Disclosures Requirements, which were introduced in 2021, mean that some large corporations now must declare their climate impact. Therefore, it’s in their interest to drop businesses which don’t have a net zero action plan from their supply chain. 

If you supply to publicly funded tenders, or work with a business that does, then PPN 06 21 requirements are also starting to require Carbon Reduction Plans for any new tenders.  

This all means that you could risk financial losses if you don’t start implementing plans to reduce your emissions. 

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What does a net zero action plan for a small business involve?

So, setting net zero targets and making action plans to reach these goals has tangible environmental and financial benefits for your business. But what do net zero plans actually entail, and are they hard to implement for SMEs?  

Luckily, they’re much simpler than you might think. That’s because effective net zero plans broadly follow the same structure for all businesses, which we’ll go through now. 

Measuring and analysing your emissions

Knowing your starting point will help you to get a better idea of what and how much action you need to take to reach net zero. So, before you go drafting up any plans, it’s wise to get a rough gist of how much your company emits and what areas of your business produce the most emissions. 

There are a few ways to do this, including: 

  • Industry generic advice using resources made for businesses in your sector
  • Spend-based measurements 
  • Activity-based measurements

For more guidance, take a look at our article on this topic.

This doesn’t mean that you should delay taking action. It can take a while for you to accurately measure your emissions, and in that time, you could start reducing your environmental impact. 

If you would like to find out what your emissions look like, use our Measure tool for a quick assessment in 3 minutes.  

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Setting your net zero target

Once you’ve got an idea of how many emissions your business produces, you can set your target for reaching net zero. 

To meet this goal, you’ll need to set lots of smaller targets to guide you. Set short-term goals for emissions reductions for every year or 6-month period until your net zero target. 

Try to be as ambitious as possible here — the worst that could happen is that you’re late in reaching your target and you have to readjust it. If you keep your customers and stakeholders informed at every step of the way, they will still be impressed by your commitment to reducing your environmental impact as quickly as possible. 

Reducing your emissions 

Now that you’ve set concrete goals for reaching net zero, you should plan out the practical measures you’ll take. According to the Net-Zero Standard, most businesses are required to cut their emissions by over 90% to actually reach net zero. 

Using your findings from Step 1, focus on the most emissions-intensive areas of your business. For example, if many of your emissions come from energy usage in your buildings, you could install LEDs, smart meters and switch to motion detector lights. If your supply chain contributes significantly to your climate impact, look into alternative suppliers that are already net zero or are taking measures to reach this target.

Offsetting any remaining emissions 

Once you’ve cut your emissions as much as possible, you can start thinking about offsetting.

To be clear, your focus on your net zero journey should always be on reduction. Never try to offset your emissions without taking reduction action. Instead, you should see offsetting as a last resort when you can’t cut your final 10% of remaining emissions down any further.

This is because preventing the production of emissions in the first place is likely to have a more positive impact than mitigating their impact once they’re already in the atmosphere. There are various issues with many offsetting schemes which mean that they might not benefit the environment as much as they claim, so it’s important not to rely on them too heavily.

We’re not saying that you should be sceptical of all offsetting schemes, but it’s essential that you do your research. As per the Oxford Principles for Net Zero Aligned Carbon Offsetting, look for offsets which are verifiable, meaning that you know they’ve followed through on their promise of using your funds to take positive action, and which add value to the surrounding community and environment.

If you need help finding the right scheme for you, check out our guide on the best domestic and international carbon offset schemes. 

How can I start making my small business’s net zero plan?

If you’re stuck on what practical steps you could plan to take on your small business’s journey to net zero, don’t worry. Here are some basic measures which should be easy to implement, while having a big effect in reducing your emissions. 

  • Switch to a renewable energy and electricity supplier
  • Switch to electric vehicles for your deliveries 
  • Minimise business travel and encourage taking the train instead of driving or flying where possible 
  • Organise virtual meetings instead of meeting in-person
  • Encourage your employees to cycle, walk, or take public transport to work
  • Discourage printing and keep documents digital 
  • Switch to suppliers who are also prioritising their journey to reduced emissions
  • Research the support available for reaching net zero in your region

You’ll be surprised at how quickly those small changes make a difference. Before you know it, you’ll be on the road to net zero. 


Still feeling overwhelmed? Don’t think too much about it. One of the most impactful things you can do is to change your mindset. Start thinking about the environmental impact of every small decision that you make in your business. When making a purchase, for example, ask yourself: do I need this? Why do I need it? Can I buy a smaller quantity? Can I buy it from a company that is net zero or is working towards a net zero target? 

Once you get started on your journey to reducing your emissions, make sure to share the changes that you’ve made and your plans for reaching net zero with your customers and stakeholders. 

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