Net zero for small businesses: a practical plan for UK SMEs

Net zero for a small business means cutting your greenhouse gas emissions by the large majority, around 90% under the most widely used definition, by a target year no later than 2050, then neutralising only the small amount left with permanent carbon removals. In practice it is a plan rather than a purchase: measure a baseline, set a near-term target, cut your biggest sources in order and report progress every year.

For a firm of 5 to 50 people, that is very achievable. Most of your emissions come from a handful of sources you already understand, such as heating, electricity, vehicles and travel.

What does net zero really mean for a 5 to 50 person business?

Net zero is a destination. You cannot claim to be net zero today in the way you can claim to pay the Real Living Wage. What you can claim is a credible commitment with a plan behind it, and that is exactly what customers, tender evaluators and funders are looking for.

The most widely used definition comes from the Science Based Targets initiative. It expects deep cuts across Scope 1, Scope 2 and Scope 3, at least 90% for most businesses, with 2050 as the latest date. If definitions are your sticking point, our guide to carbon neutral vs net zero covers them in full.

The scale is reassuring. An eight-person office business might have a footprint of around 5 tCO2e a year. A 20-person trades firm running six diesel vans could be several times that, almost all of it from fuel. Either way, the list of things to change is short and specific.

There is no law requiring an individual small business to reach net zero. The UK’s 2050 target sits in the Climate Change Act, and central government contracts under PPN 006 ask suppliers to commit to net zero by 2050 at the latest. That is why the phrase keeps appearing in your inbox.

Step 1: Why do you need a baseline first?

Because every target is a percentage of something. Your carbon baseline is a full year of emissions, measured on a clear basis, that every future year is compared against. Without it, “we will halve our emissions” has nothing to halve.

A good baseline:

• covers 12 consecutive months, ideally a normal trading year
• follows the GHG Protocol and uses the UK Government conversion factors for that year
• includes Scope 1 and 2 in full, and the Scope 3 sources that matter for you, such as flights, commuting, staff mileage and purchases
• labels each figure as measured, estimated or a data gap

That last point matters more than it looks. If you estimate your waste in year one and measure it in year three, you want to know whether a change is real or just better data.

Step 2: What net zero target should a small business set?

Set two targets: a near-term one that drives decisions this decade, and a long-term net zero date.

A popular route is the SME Climate Hub. From 2026, new signatories commit to halve their greenhouse gas emissions within ten years, reach net zero before 2050 and report progress every year, with a recommendation to aim to halve Scope 1 and 2 within five years. Businesses that signed earlier committed to halve emissions before 2030, and the Hub says those commitments do not change. Joining is free.

If you want to go further, the SBTi has a streamlined route for SMEs. Our entry on science-based targets explains it.

A practical target might read: “Against our 2026 baseline of 14.2 tCO2e, we will halve our emissions by 2036 and reach net zero by 2045.” Our net zero commitment statement example shows how to word it in full.

Choose your date by working backwards. When does your van lease end? When is the boiler due for replacement? When does your energy contract renew? A date built from those answers is far more convincing than a round number.

Step 3: Where will your biggest reductions come from?

That depends on what kind of business you run. Your footprint will tell you, but these patterns are common.

Business type	Usually the largest sources	Main levers
Office-based firm	Gas heating, electricity, flights	Heating controls, renewable tariff, rail-first travel, heat pump with the landlord
Remote or hybrid team	Homeworking, commuting, travel, IT purchases	Travel policy, longer device life, fewer but better meet-ups
Trades and field services	Van and car fuel	Route planning, driver habits, electric vans at lease end
Shop, cafe or hospitality	Electricity, gas, refrigerants, waste, stock	Efficient refrigeration, leak checks, waste to energy recovery, supplier choices
Workshop or manufacturer	Process energy, plant fuel, materials	Equipment upgrades, on-site solar, material efficiency

To see why the order matters, take the trades firm. Six diesel vans each doing 12,000 miles a year, at an approximate 2026 factor of 0.41 kg CO2e per mile, produce about 29.5 tonnes. Its office uses 15,000 kWh of electricity, about 2 tonnes at roughly 0.13 kg per kWh. LED lighting is worth doing, but the vans are where net zero is won or lost.

How long will yours take?

Pick the option that sounds most like your business. You will see a realistic time, what to have nearby and a head start on the questions.

Which sounds most like you?

Sole trader working from homeConsultants, designers, developers, coaches10 to 15 minSole trader or freelancer in a co-working spaceA desk at a WeWork, Regus or local hub10 to 15 minSmall team in a co-working or serviced officeStartups and agencies with 2 to 25 people15 to 20 minSME with its own office and no vehiclesProfessional services, tech firms, studios20 to 30 minSME with vans, cars or regular staff travelTrades, field services, consultancies on the road30 to 45 minShop, cafe, workshop or product businessRetail, hospitality, makers and manufacturers30 to 45 min

Your estimate

Pick the option closest to your business and we will tell you how long it takes and what to have ready.

Most small businesses finish in under 30 minutes. Sole traders are often done in 10.

Step 4: How do you turn the target into a roadmap?

Group your actions by when they can realistically happen.

• This year. Switch to a renewable electricity tariff at renewal, put heating on timers, adopt a rail-first travel policy, ask your waste contractor where your general waste goes.
• At natural replacement points. Replace vans and cars with electric ones as leases end, swap the gas boiler for a heat pump when it is due, and refresh IT on a longer cycle.
• Over five to ten years. Work with your landlord on insulation and heating, add on-site solar if you own or control the roof, and ask your main suppliers for their own figures and targets.

One nuance worth knowing: a REGO-backed renewable tariff brings your market-based electricity emissions to zero, but your location-based figure only falls if you use fewer kWh or generate your own. Report both. Our location-based vs market-based entry explains why, and our guide on how to reduce your carbon footprint covers each source in detail.

Give every action an owner and a rough date. In a small firm, the owner is usually a director.

What do you do about the emissions you cannot cut?

Offsets come last. Under SBTi-style net zero, residual emissions are limited, typically to no more than about 10% of your baseline, and they must be neutralised with permanent carbon removals rather than credits for emissions avoided elsewhere.

You do not need to buy anything now to have a credible net zero plan. If you choose to fund carbon projects while you reduce, report them as a separate line next to your footprint, never subtracted from it. “We emitted 12.4 tCO2e and separately funded 5 tonnes of verified removals” is honest. “We are carbon neutral” on the strength of cheap credits is the kind of claim the CMA’s Green Claims Code warns against. Our greenwashing entry has more on the pitfalls.

Until your target year, describe yourself as “committed to net zero by 2045”, not “net zero”.

How do you report net zero progress each year?

Measure again over the same 12 months, with the same boundary and the same method, using that year’s conversion factors. Then report:

• total emissions by scope against the baseline, in tonnes and as a percentage change
• emissions per employee, so growth is visible in context
• energy use in kWh, because factors change from year to year
• the actions you completed and the ones that slipped, with a reason

Showing kWh matters. The UK grid electricity factor fell by about 26% in the 2026 set, so a business that changed nothing saw its location-based electricity emissions drop. Readers trust you more when you separate your own progress from a cleaner grid.

If your business changes shape, for example by doubling in size or adding a second site, the GHG Protocol allows you to recalculate the baseline so the comparison stays fair. Say when you have done it.

Where do you start?

With the baseline. Once you have it, the target and the actions tend to suggest themselves.

ESG Now calculates your footprint across Scope 1, 2 and 3, including heating fuels, vehicles, refrigerants, electricity, travel, commuting, homeworking, waste, water and an optional spend-based estimate of purchases. It records any carbon target, baseline year and priorities, and gives you a shareable report plus a private action plan in order of impact. An office business with no vehicles usually finishes in 20 to 30 minutes, and one with vans in 30 to 45. Your first report is free. Start your report, or see more on our small businesses page.