What is net zero, and how do we achieve it? A comprehensive guide for small businesses

As a small business owner, you’ve got a million and one things constantly on your mind. By now, you’ve probably heard the term ‘net zero’ being thrown around, which essentially aims to reduce our carbon footprints as much as possible.

But what does it actually mean to be net zero, and how can this shape your business's future? From energy-efficient practices to sustainable supply chains, we’ve covered everything you need to know about helping your business to make a positive impact (without all the confusing jargon)

30-second summary

• Being ‘net zero’ is about removing the carbon dioxide (C02) we emit into the atmosphere to stop the build-up of greenhouse gases that cause the 'greenhouse gas effect'. Most businesses emit some carbon dioxide but small steps can be taken to reduce the amount.
• Net Zero is part of The Paris Agreement signed by 196 world leaders. It's important we work together to achieve net zero, this means stopping global warming from reaching 2 degrees Celsius.  
• We can achieve Net Zero by removing carbon from the atmosphere, improving energy efficiency in buildings, decarbonising power sources and using electric-driven transport.
• Businesses can help by reducing waste, recycling and composting and becoming more energy efficient in their general business practices.
• We're moving to a greener way of living - more companies are becoming sustainable, customers are becoming more ethical, and investors are looking for sustainable businesses.
• Bionic can help advise on greener business practices as well as green energy tariffs for your business.

What does it mean to be net zero?

In simple terms, the concept of being ‘net zero’ means aiming to remove as much CO2 that is emitted, to stop the build-up of greenhouse gases in the atmosphere. 

Greenhouse gases are gases that trap heat in the Earth's atmosphere, leading to the greenhouse effect and influencing the planet's climate. These gases can absorb and re-emit infrared radiation emitted by the Earth's surface. As a result, they act like a blanket, trapping heat and preventing it from escaping into space.

Carbon dioxide (CO2) is the most significant greenhouse gas in terms of its contribution to global warming. It’s released through various human activities such as burning fossil fuels — like coal, oil and natural gas — as well as things like deforestation and industrial processes. 

What does net zero mean for my business?

Whether it’s through a business's premises, the vehicles they use or even their supply chain, even the smallest of companies produce carbon emissions. 

The UK government's stance is that taking action on climate change can help businesses grow, encourage investment and adapt to the ever-changing planet. 

Why is net zero important?

Achieving net zero emissions is crucial in helping businesses navigate climate change. By reducing greenhouse gasses and balancing any remaining emissions through removal or offsetting, businesses can help limit global warming to well below 2° Celsius. This was the key objective outlined in the Paris Agreement. 

The Paris Agreement is an international treaty adopted by 196 parties at the UN Climate Change Conference that was agreed in November 2016 in an effort to take on climate change.

How do you achieve net zero?

Achieving net zero is a big job and an ongoing process; however, there are several ways businesses can help:

• Removal of carbon from the atmosphere — To reach net zero, businesses can actively help to remove CO2 from the atmosphere. This can include investing in nature-based solutions such as afforestation — planting new forests — and reforestation — restoring existing forests. Additionally, carbon capture and storage (CCS) technologies can be used to capture CO2 emissions from industrial processes and store them underground.
• Improve energy efficiency in buildings — Buildings are big contributors to greenhouse gas emissions. To help reduce their carbon footprint, businesses can aim to improve energy efficiency within their facilities, including office spaces and warehouses. This can include everything from improving insulation, installing energy-efficient lighting and conducting an energy audit.   
• Decarbonisation of power — Transitioning to low-carbon or renewable energy sources is an important step towards being net zero. Businesses can start using electricity from renewable sources like solar power, wind, hydro and geothermal. This can be achieved through on-site generation or power purchase agreements (PPAs) with renewable energy providers.
• Electrification of transport — The transportation sector is a significant contributor to greenhouse gas emissions. Businesses can work towards net zero by electrifying their vehicles. This includes transitioning from fossil fuel-powered vehicles to electric vehicles (EVs) and installing charging infrastructure. Encouraging employees to use public transport, promoting car sharing where possible, and supporting other options like cycling and walking can also help to reduce emissions from commuting.

In the quest for sustainability, businesses play a vital role in making significant strides toward achieving net zero.

What has the UK pledged to do?

To help reach net zero by 2050, the UK has set out several policies and proposals that include:

• Banning the sale of new petrol and diesel cars from 2030, with the aim to make the switch to electric vehicles.
• Installing 600,000 heat pumps a year in order to replace gas boilers by 2028. Find out more about commercial heat pumps for your business with our guide. 
• Generating all electricity from clean sources, such as wind and solar, by 2035.
• Using carbon capture to remove between 20 and 30 million tonnes of CO2 per year by 2030. 

According to the Climate Change Committee’s 2022 Progress Report to Parliament, the Net Zero Strategy has seen very little concrete progress; in fact, emissions rose 4% in 2021 as the UK economy began to recover from Covid-19. 

More support for industries in 2024

On January 22, 2024, the UK government announced a multi-million-pound package to help UK businesses cut emissions and energy bills in a bid to reach net zero. How? The package will give 'winning' businesses funding as well as access to advisors that can help with energy-efficient initiatives such as hydrogen or carbon capture. 

Winners will be announced from the Local Industrial Decarbonisation Plan competition which took place last summer. This is a step in the right direction for industrial businesses, that have been overlooked, to tackle emissions. Competition applications are now closed, so it's looking unlikely new businesses can benefit from this specific support. However, a new phase of the Industrial Energy Transformation Fund is also set to be announced in early 2024 for £185 million. This funding will also help companies transition to greener operations with a more secure energy supply. 

Will this all really make a difference?

To understand if the government support will really help businesses, it's worth recapping how this could affect a monthly business energy bill.

• Consumption could be lowered. If businesses can replace old, energy-hungry equipment with new energy-efficient versions, then this could potentially lower the amount of energy used. In turn, this could lower monthly energy consumption. 
• Standing charges wouldn't be affected. And if you're on a variable tariff they could also fluctuate — we can never can't predict whether they'll go up or down.
• Taxes and levies could be reduced. Industrial businesses have the potential to reduce their Climate Change Levy (CCL) payments set by the Climate Change Agreement (CCA) with the Environment Agency. But to receive the discount, businesses must hit their agreed targets to increase energy efficiency and reduce carbon dioxide (CO2) emissions. If they do, they could get a discount on their CCL payments.

That being said, if winning businesses use the support in the right areas — some could aid in saving the environment and shave money off their energy bills at the same time. 

Can we be net zero by 2050?

While the goal of achieving net-zero emissions by 2050 is ambitious, it is considered feasible with significant efforts and investments across different sectors. The UK's progress towards this target will depend on continued commitment, policy support, technological advancements, and collaboration with businesses, communities, and international partners.

How can my business move to net zero?

No matter how big or small your business may be, there are some quick and easy steps you can put in place to help your business move toward becoming net zero.

Basic steps

1. Reduce waste — Implement strategies to minimise waste generation within your business operations. This can include measures like optimising production processes, reducing packaging, and encouraging responsible consumption. If there’s less going to landfills, this benefits the environment.
2. Recycle and compost — Establish a robust recycling and composting program within your workplace. Ensure that employees are educated about proper recycling and waste disposal practices. By recycling plastic, paper, cardboard and other materials, businesses are helping to lessen the impact on the environment. 
3. Energy efficiency — Improve energy efficiency in your facilities by installing energy-efficient lighting, upgrading equipment, and implementing smart energy management systems. This will help reduce your energy consumption and lower carbon emissions.

Advanced options

1. Greener supply chain — Work with your suppliers to make your supply chain more sustainable. Encourage them to adopt environmentally friendly practices and prioritise suppliers that share your commitment to sustainability. You can look into buying products that take less energy to make, transport and use as a starting point. 
2. Cut down on packaging — Explore ways to reduce packaging materials and choose eco-friendly alternatives. Consider using biodegradable or compostable materials and design packaging that minimises waste and maximises recyclability!
3. Renewable energy options — Transition to renewable energy sources for your business's electricity needs. Installing solar panels or exploring purchasing renewable energy credits can help to offset your energy consumption.
4. Carbon offsetting — Consider investing in carbon offset projects to compensate for any remaining emissions that your business cannot eliminate. Support projects such as reforestation, renewable energy initiatives, or methane capture projects to offset your business's carbon emissions.

How are times changing?

These days, there are so many reasons why it’s so important for companies to work toward becoming net zero. Not only are consumer views switching, but the rules and regulations surrounding the environment are changing. 

Employees are actively seeking out more sustainable companies

Employees, especially younger generations, are increasingly prioritising sustainability and environmental responsibility in their career choices. They are actively seeking out companies that demonstrate a commitment to addressing climate change and reducing their carbon footprint. This shift in employee expectations is influencing businesses to adopt more sustainable practices to attract and retain top talent. 

But that’s not to say it doesn’t come without its criticism. Businesses that openly raise awareness about climate change and move toward a net zero future are often met with even harsher criticism to ensure all processes in place are legitimate. 

Customers are turning toward more ethical brands

Consumers are becoming more environmentally conscious and are gravitating towards brands that align with their values. They’re increasingly seeking out ethical and sustainable products and services, and businesses that actively address climate change and promote sustainable practices are more likely to attract and retain customers who prioritise environmental responsibility.

Investors are looking for more sustainable business models

Investors are recognising the financial risks associated with climate change and are incorporating environmental considerations into their investment decisions. They’re increasingly seeking out companies with sustainable business models and climate resilience. 

Businesses that demonstrate a commitment to net-zero emissions, energy efficiency, and sustainable practices are more likely to attract investment and secure funding.

If you’re looking to find the right investor for your business, take a look at our handy guide. 

Get your business set with Bionic

No matter the size of your business, helping to contribute toward becoming net zero is one of the biggest impacts it can make. Whether it’s reducing the packing in your supply chain or implementing a greener transport link for your employees, even the smallest of changes can make a big difference.

If you need more help understanding business energy, head over to our energy guide pages for more information. Or, get in touch today with the Bionic team to discuss your business energy needs to compare business electricity and gas.