SMEs and Net Zero Report 2025 (British Business Bank)

Summary

• SMEs generate around 37% of total UK greenhouse gas emissions and account for half of all business emissions.p.11
• Emissions are highly concentrated, with 14% of UK SMEs operating in carbon-intensive sectors producing around 84% of total UK SME emissions.p.5
• Transitioning to net zero is a low priority over the next 12 months for 59% of SMEs.p.6
• Despite low prioritisation, 77% of SMEs have already taken at least one action towards net zero.p.9
• A large majority of SMEs (83%) perceive at least one barrier to net zero, with high costs being the most cited barrier at 66%.p.16
• Actual usage of external transition finance remains very low, with only 7% accessing grants or funding and 2% using loans or finance.p.43

Key insights

1. SMEs asked for carbon footprint data by customers or tenders in the last 12 months were nearly four times more likely to consider net zero a high priority.p.6
2. Perception of benefits increases with business size, from 57% for zero-employee businesses to 85% for medium-sized enterprises.p.34
3. The most common net zero actions taken by SMEs are low-cost measures like energy efficiency (59%) and waste reduction practices (55%).p.26
4. Complex or expensive measures remain uncommon, with only 6% of SMEs using heat pumps and 6% accessing green finance or grants.p.27
5. Only 3% of SMEs have actively engaged with their financial providers on net zero.p.43