Last week we hosted a private round-table event in partnership with Lloyds Bank and British Chambers of Commerce to discuss skills and knowledge barriers faced by SME’s in meeting Net Zero. Below we highlight some of the key points made by delegates.
Liz Delahaye, Lloyds Bank
“We are committed to helping businesses to prosper and we want to shape finance as a force for good.”
“We understand that SMEs are tenacious and resilient, but in the face of ongoing challenges such as Brexit, cost of living, rising fuel costs and the impact of the war in Ukraine, we’re here to provide support in any way that we can.”
Glenn Bemment, Lloyds Bank:
“SMEs are at all different points and levels in their journey towards net zero. We commissioned our Now to Net Zero research with 1,000+ SMEs and boiled down those findings to construct a five-point plan, covering everything from where to get started, how to measure progress and the importance of learning from peers.”
“We believe we are playing an important role in finding the answers to this problem, but we are also listening to find out how we can do more, so it’s great be in your company today.”
Paul Cherpeau, Liverpool Chamber:
“CSR has often been associated with a box-ticking exercise, or greenwashing, but the move towards the language of ESG had led to a significant change and a much more serious commitment, with many organisations now appointing people into specialist roles.”
Matt Breakwell, Kimpton:
“I agree and we have experienced a significant rise in demand for photovoltaic installations, with the payback period now down to around three years. This is clearly impacted by spiralling costs elsewhere for more traditional energy sources.”
Andrew Dwerryhouse, Wild Thang:
“As a business, we have always been committed to making a real difference to the environment. That’s often a personally driven mission, but the major question is always around ‘how?’. Becoming sustainable can look really expensive and simply not a viable option for some businesses.”
Stuart Fitzgerald, Socialise:
“When you consider that 99% of businesses in the Liverpool City Region are SMEs and 70% of those are micro businesses, how can those micro businesses get involved in ESG and what can be done to help them?”
John Newberry, Avrenim Group:
“After attending COP-26 and seeing the reaction of our customers, we pivoted our business from a traditional contractor model to a specialist ESG contractor. The payback on the business case used to be around seven years, but now it is closer to one year. Green energy is becoming more economically attractive.”
“We have also launched a new business, Helios, which is focussed on importing a range of electrical components associated with renewable energy from India, where there is a mature net zero manufacturing sector.”
PC:
“How significant are the barriers to change and can businesses see this as an opportunity as well as a challenge?”
JN:
“For an SME owner, the question when making any decision is “what is the return?” The majority want to move with the times, but at what cost? Our pivot has been an interesting journey, with some mistakes along the way, and we have learned a lot. Overall, it has been a really positive experience.”
“It was very difficult to get ourselves on to the banks’ supply chain PPAs, but once we were on, it was much better. The banks help to market the service and support with costs such as maintenance, and we have now developed lots of interesting relationships.”
“Net zero accounts for about 20% of ESG and we wrote our own ESG policy to bring together a range of policies under one umbrella, such as decarbonisation, CSR and waste.”
“Waste is definitely a policy area that needs to be addressed. Strong beliefs are great but the hard, economic realities can be very different. The local authority’s waste policy doesn’t reflect its commitment through the procurement process.”
SF:
“There are global imperatives coming at businesses from every angle, so the challenge is how well businesses can adapt their shape.”
MB:
“We work with a variety of local authorities and we see enormous disparities between locations. Some councils are simply behind the times, while others are rigorous in applying their ESG priorities such as waste policies, or ensuring firms pay the Living Wage, before they’ll even consider a procurement bid.”
“As PV payback accelerates, finance directors are keen to sign off on installations as they see a clear return in the near future.”
“Carpet tiles are an obvious example of waste in office refits as new occupiers have new ideas – how can we recycle or find a home for them? We put the word out through Liverpool Chamber and were able to donate them to local children’s and homeless charities. This actually proved cheaper than using a skip, showing that a commitment to ESG can work in practice and actually save money too.”
GB:
“This is at the heart of everything when it comes to ESG and the rest simply hangs off that approach – the cost of not committing to ESG can be both financial and substantial.”
“A strong ESG policy can make an average business into a valuable and attractive business, to its customers and its employees. And the opposite is also true. If you are losing good people, because they want to work for a more sustainable business, then recruiting staff becomes much more expensive and also harder.”
SF:
“That’s a great example of competitive advantage and it can be especially important at the point of exit from a business. It’s really a no-brainer and we must embrace it.”
Alison McGuinness, Liverpool One:
“I agree that the commitment needs to be intrinsic to the organisation. We have deliberately avoided having a specific ESG budget because it actually cuts across everything. We shouldn’t be building ESG or CSR towers.”
GB:
“Management is crucial here – it’s not just the job of one person or department. The financial and physical capacity for change around ESG is often more limited in small business and the challenges are therefore more profound.”
SF:
“Liverpool has the second least dense LEP area for business and we need to find ways to counter that. ESG must be seen as an area of opportunity for growth, as there is so much potential here. We need an ESG champion for the city region.”
AD:
“There is a huge opportunity for growth that we ought to tap in to. The lending strategy of banks and the message from central government must address this challenge and opportunity.”
GB:
“Social, transport and health Inequalities are all affected by a failure to adopt an effective ESG approach. We always look at return on investment in our activity, but we should also be looking at impact. A consistent framework is needed.”
“Our green building tools are there to help businesses make decisions more easily. We understand that our outcomes must be measurable and impactful.”
Gavin Sherratt, Mashbo:
“We work with our clients to encourage them to reduce the negative impacts of their work, such as less reliance on data centres which produce electricity that is not recycled, or sending fewer emails.”
“We often find there are too many resources and too much information out there, and there needs to be more signposting. We do lots of good work in this area, but how can we best document what we do?”
PC:
“At the time of COP-26, there were 22 different systems of measurement, which reinforces the point Gavin is making. Which baseline should SMEs choose?”
GB:
“Businesses need to look for a credible transition plan. My advice would be to choose an option and work on the assumption that the chosen option will work and deliver meaningful change, then move forward from there. They can adapt later if they need to.”
PC:
“What skills are required to carry forward this change and what actually qualifies as green skills?”
AM:
“There is certainly a shortage of skills around ESG and we are beginning to see that come through at the moment.”
Marc Barlow, Curtins:
“We absolutely need a mindset of wanting do the right thing, but if there was a flagpost document, that would create a baseline. The next generation of green skills is going to be hugely important – younger people will want to know that a firm matches their own commitment and will encourage them to keep developing new skills.”
“People in our business are carbon literate. Lots of companies want to do something effective, but they are often all doing something different to each other. A Pat Z design standard is currently being introduced for engineering businesses to increase carbon literacy and ensure we are all singing from the same hymn sheet.”
“If we are to retrofit more and demolish less, we must make sure we have the skills for that.”
Anthony Seasman, LJMU:
“Skills are crucial and carbon literacy comes through process.”
“Some audit tools are much easier to use than others – at LJMU our tools focus on Scope 3 elements around carbon emissions. We ask how can understanding become part of the everyday offer.”
“The responsibility is still incumbent on businesses, but our support can help them take the first few steps.”
Glenn:
“Education is key, which is why ESG training has become a part of training for all of our colleagues.”
“Leaders from public and private sectors need to work closely with Education sector to articulate exactly what green skills involve, e.g. retraining gas boiler engineers on how to maintain and repair heat pumps. There is plenty of opportunity to move forward with an agile workforce that is able to adapt.”
“My challenge to those in the room and the wider local business community is to think about not only the financial costs or human constraints of an effective ESG strategy, but more importantly the cost of not having one.”
“Sustainability should not be something else we do, but a part of everything we do. Financiers want to support a just transition to net zero and we will help businesses to take those first steps.”