What is the Climate Change Act, and does it affect small business owners?

Becoming a greener business is a high priority for a growing number of business owners. According to a study conducted earlier this year, more than eight in 10 small businesses (88%) say there are areas of sustainability that are more important to them at the start of 2025 than they were a year ago.

We've already told you how climate change can affect how you run your small business, so let's take a closer look at how climate change legislation, such as the 2008 Climate Change Act, can impact your business. 

We've also got tips on how you can align your business with its goals. Let's go.

What is the UK Climate Change Act 2008?

The Climate Change Act is legislation passed by parliament in 2008. It initially set out clear targets to reduce UK carbon dioxide emissions by at least 80% from 1990 levels by 2050.

This target was increased in 2019 when the UK became the first major economy to pledge a net-zero target (net zero means lowering greenhouse gas emissions to as close to zero as possible). The new target means the UK needs to cut all greenhouse gas emissions to zero by 2050.  

How does the Climate Change Act address environmental concerns?

The Climate Change Act addresses environmental concerns by setting out clear ways to reduce carbon emissions. It also lays out 'carbon budgets', which are targets that must be met within strict timeframes. The government is held responsible if these targets are not hit.

The act legally requires the government to set carbon budgets every five years. The aim is to help the UK reduce emissions and adapt to changes already caused by climate change.

The Committee on Climate Change (CCC) was set up alongside the Climate Change Act. This is an independent expert body that advises the government on targets and keeps track of climate progress. The CCC collects evidence and figures to show how the UK is reducing emissions and whether they are successful.

What motivated the UK to implement the Climate Change Act?

The act was a direct response to the international climate crisis, and the UK was the first country to enforce legally binding carbon budgets.

The Climate Change Act was motivated by the need to reduce the UK’s carbon footprint and cut the amount of carbon dioxide we produce as a nation. The Act helps ensure the UK plays its part in responding to the global climate emergency and the fight against climate change.

Across the world, countries are collectively trying to achieve net zero. They are doing this by balancing the amount of carbon in the atmosphere with the carbon removed from it. But to reach this stage, we all need to work together to reduce activities that add unnecessary carbon to the air.

Good practices include opting for an electric car instead of petrol/diesel, cycling or using public transport when able to, limiting air travel, cutting down on how you use electricity at your business (e.g. not leaving lights or computers on when you’re not in the room) and reducing the amount of waste you produce. Recycling and reusing are also great ways to become a more sustainable business.

What are the key objectives of the Climate Change Act 2008?

The main objective of the Climate Change Act is to help the UK reach net zero by 2050. To achieve this, the government has set out a few different policies, including:

• Banning the sale of new petrol and diesel cars from 2030 - This is to encourage the switch to electric vehicles (which are better for the environment and cause less pollution)
• Installing 600,000 heat pumps a year - The aim is to replace gas boilers by 2028. Read our guide to find out more about commercial heat pumps for your business. 
• Generating all electricity from clean sources by 2035 - Clean sources include wind and solar.
• Leverage new carbon capture tech - Using carbon capture to remove between 20 and 30 million tonnes of CO2 per year by 2030. 

What are carbon budgets?

Carbon budgets are legally binding limits on the amount of greenhouse gas the UK can emit over five-year periods. As of 2025, seven carbon budgets have been made law and they run until 2042.

For small businesses, they drive the need to reduce emissions, improve efficiency, and access financial support while staying competitive and compliant with evolving climate regulations

Complying with carbon budgets can help your small business:

• Reduce energy costs and save money through improved efficiency
• Gain access to government grants, loans, and financial aid aimed at supporting green transitions
• Maintain competitiveness by aligning with consumer and investor expectations for sustainable business
• Stay ahead of regulatory requirements and taxes related to carbon emissions
• Build resilience against risks associated with climate change and evolving market trends

What are the benefits of the Climate Change Act? 

There are lots of benefits stemming from the Climate Change Act. They include:

• Emission reduction - Reducing gas emissions can improve individual and public health, ensure our lifestyles are more active and also introduce cleaner air, water and soil.
• Enhanced energy efficiency - Energy efficiency means using less energy to perform the same activity or produce the same result as using more energy. Energy-efficient buildings use less energy to heat or cool. Being efficient with your appliances and electronics means you’re saving energy and often money.
• Stimulated innovation and research - The UK has been pretty successful in lowering carbon emissions from electricity generation. Numbers have fallen by roughly three-quarters since 1990. This is due to the declining use of fossil fuels (like coal) for electricity.
• Green job creation - Green jobs are jobs that focus on reducing carbon emissions or making environmental improvements. Sustainability specialists and green transport officers, for example.
• Improved air quality and public health - Cleaner air improves the quality of life and reduces the spread of diseases. Less pollution can limit triggers for conditions like asthma and allergies in some cases.

What happens if we don’t act on climate change?

Climate change is a huge issue that's changing the world we live in. But global warming isn’t just an environmental emergency, and it has knock-on effects for many things, including how you run your business.

The World Health Organisation (WHO) estimates that between 2030 and 2050, the effects of climate change will cause 250,000 more deaths worldwide each year. This is resulting from malnutrition from poor harvests, but also the spread of diseases like malaria, diarrhoea, and heat stroke.

If we don’t do anything about reducing our carbon footprint, then unfortunately:

• Many species of animals will become extinct due to their habitats being destroyed (in wildfires etc)
• Superstorms, drought and other extreme weather conditions will become the norm, resulting in poor harvests and food shortages.
• Agriculture will plummet, causing widespread famine.
• Extreme heat waves could see more humans and animals suffer from heat stroke and breathing difficulties, causing more deaths.

How successful has the Climate Change Act been?

A review of the Act by the Grantham Research Institute in 2018 found that the introduction of the Climate Change Act and the carbon budgets have helped to reduce emissions in the UK, specifically in the power sector. The country's gross greenhouse gas emissions decreased by 26% between 2010 and 2019, and the Act was successful in spreading the word about the importance of going green.  

What can businesses do to align with the Act’s objectives?

There are several things you can do as a small business owner to make sure you’re doing your part to lower emissions and align with The Climate Change Act’s main guidelines. You can:

• Adopt a renewable way of running your business - For example, check all your equipment to ensure it is working correctly. Make sure you’re not using more energy than needed. If machines are not properly maintained, they can use way more electricity than necessary.
• Encourage low-emission transport - Try to encourage staff car shares, or set up incentives for cycling to and from work. Encourage the use of public transport. Also, see if you can squeeze supplier visits into one day/one trip rather than spreading them out. 
• Look at your supply chain – Try to engage with sustainable suppliers. This could help your business demonstrate a real commitment to the environment. You could also try being proactive by ensuring you’re using environmentally friendly materials or ingredients. Maybe look at the way you package products - can you go plastic-free? 
• Waste reduction and recycling - Encourage recycling where you can, and educate your staff on the importance of sticking to a good recycling schedule. Also, is there a scheme you could set up where customers bring in their own reusable coffee cups to get money off their order if you run a cafe? Or say you run a hair salon, could you offer a discount if customers bring in their own containers to refill with hair products? 
• Employee engagement - Educate your staff on how to properly follow recycling protocols. It might be helpful to dedicate time for training, so they are aware of why it's so important to reduce waste. Maybe you could incentivise them too, offer a prize for the staff member who’s championed recycling the most that month.

Is any financial assistance available to help small businesses comply with the Climate Change Act?

Yes, financial assistance and support schemes are available to help small businesses comply with the Climate Change Act and support their sustainability efforts. These include:

• The UK government has committed nearly £5 billion to assist businesses, including small businesses, in reaching net-zero emissions by 2050. Only about 11% of smaller businesses have accessed this finance so far.
• Public funding sources include government grants and loans, such as those found via the Government’s Find a Grant scheme, startup loans, and Research and Development (R&D) tax relief for green product or service development.

Specific sustainability grants  available for small UK businesses include:

• The Clean Growth Fund offers investments between £500,000 and £3 million for early-stage cleantech startups.
• Local council grants like the LEAP Small Business Grant (up to £2,000 or more) in Horsham and the Green Business Grant in Glasgow (up to £10,000) for sustainability projects. Check your local council's website for details of initiatives in your region.
• Regional funding, such as the UK Shared Prosperity Fund, offers grants to SMEs in various UK regions. These grants can be used for sustainability-related business improvements, among other things.

It's also worth checking with banks and lenders for financing options. Some may offer green loans and sustainability-linked lending to help with energy-efficient equipment upgrades.

For more detailed information on financial aid and other green schemes, check out the government-backed UK Business Climate Hub. This offers guidance, tools, and highlights funding opportunities to support business climate compliance and sustainability transitions.

How Bionic can help your business

We all want to see our businesses boom whilst doing our bit for the environment. This guide should have cleared up any confusion around the Climate Change Act and inspired you to lower your own carbon footprint. We can't help you make changes, but we can help you save time when sorting your business essentials - time that can be put back into your business or used to improve its green credentials.

Get in touch today with the Bionic team to discuss your business needs or get more information on business energy, including business gas.