What is Net-Zero: A Practical Guide for Small Businesses
Net-zero is a topic on the tip of everyone’s tongues, and rightly so. The UK is legally bound to achieve net-zero carbon emissions by 2050, and the Mayor of London has also set ambitious aims for London to be a net-zero carbon city by 2030, all to prevent severe climate disruption.
But what actually is ‘net-zero’, and how do we achieve this?
LCCI has pulled together this guide to explain what net-zero really means, why it matters, and how Small and Medium Enterprises (SMEs) can take practical steps today.
What Does ‘Net-Zero’ Actually Mean?
Net-zero refers to the balanced state where the amount of greenhouse gases (such as CO₂) emitted is matched by the amount removed. Simply put, CO₂ in = CO₂ out.
This is important because this balance is the state at which global warming stops 1.
Scientists agree that global CO₂ emissions must fall 45% from 2010 levels by 2030 and reach net-zero by 2050 to prevent severe climate disruption.
Unlike absolute zero (no emissions at all), net-zero allows businesses to continue operating while reducing emissions as far as possible and offsetting the remainder through credible carbon removal.
Why Net-Zero Matters for SMEs
Small businesses play a critical role in the UK’s climate ambitions. The Mayor of London’s target for the city to be net-zero carbon by 2030 relies on collective action from organisations of all sizes.
Alongside the contribution to halting the impact of climate change, working towards net-zero offers several benefits:
- Lower operating costs through reduced energy and fuel consumption
- Improved air quality and healthier workplaces, supporting staff wellbeing
- Stronger customer trust and loyalty, as more people choose sustainable businesses
- Greater resilience as legislation, finance requirements and supply chains evolve
- New market opportunities in the growing green economy
Every reduction helps, and small changes add up fast.
Where do Small Business Emissions Come From?
To know how to cut down emissions, it’s useful to understand where they may be coming from in the first place. The main sources of emissions from businesses include:
- Energy use in buildings (heating, cooling, lighting)
- Transport and logistics
- Manufacturing and materials
- Food and packaging
- Business travel
- Waste and overconsumption
Many of these come from everyday activities, which means they’re also areas where small changes have a big impact.
How to Cut Down These Emissions?
Cutting emissions doesn’t have to be complex or expensive. Many actions are simple changes that save money as well as carbon.
Here are some practical steps SMEs can take right away:
1. Reduce energy use in buildings:
- Switch to LED lighting and install motion or daylight sensors.
- Improve insulation and draught-proofing to reduce heating demand.
- Review heating and cooling schedules so systems aren’t running unnecessarily.
- Choose renewable electricity or a green energy tariff where possible.
2. Rethink transport and travel:
- Encourage staff to walk, cycle or use public transport where practical.
- Introduce remote or hybrid working to eliminate unnecessary commutes.
- Plan delivery routes efficiently or consolidate shipments to cut fuel use.
- Consider transitioning to electric vehicles for company fleets or using low‑carbon couriers.
3. Choose sustainable materials and suppliers:
- Reduce the amount of raw material used through smarter design or reuse.
- Source lower‑carbon or recycled alternatives where possible.
- Work with suppliers committed to reducing emissions and improving transparency.
4. Reduce waste and overconsumption:
- Conduct a waste audit to spot what materials are being discarded and where.
- Increase recycling rates and replace single‑use items with durable alternatives.
- Introduce circular practices such as repair, refurbishment or take-back schemes.
5. Make small behavioural changes part of the culture:
- Encourage staff to turn off equipment, lights and heating when not needed.
- Run awareness sessions so everyone understands their role.
- Celebrate quick wins to build momentum.
What About the Emissions You Can’t Eliminate?
Even with strong action, most businesses will still produce some emissions that are difficult to remove entirely. This is where carbon offsetting comes in.
Carbon offsetting allows businesses to compensate for unavoidable emissions by supporting projects that reduce or remove carbon elsewhere, such as tree planting, restoring natural habitats or funding renewable energy generation. However, not all offsets are equal.
When looking at offsetting options:
1. Prioritise real, measurable and permanent carbon removal
Focus on high‑quality projects that physically remove CO₂ from the atmosphere, such as reforestation, soil restoration or verified carbon capture technologies.
2. Choose verified and credible schemes
Look for standards such as:
- Gold Standard
- Verified Carbon Standard (VCS)
- UK Woodland Carbon Code
These help ensure the project delivers genuine climate benefits.
3. Use offsets only for what you truly can’t reduce
Offsetting should complement, not replace, your emissions reduction efforts. Reducing emissions at the source is always the most effective and affordable option.
4. Be transparent
Clearly communicate:
- What emissions you’re offsetting
- Which projects you are supporting
- Why these emissions could not be eliminated
This transparency helps build trust with customers, staff and stakeholders.
Steps to Start Your Net-Zero Journey
The SME Climate Hub 2 and UK Business Climate Hub 3 outline clear steps for getting started. Here’s a simple framework:
- Understand the basics – identify what net-zero means for your business and sector.
- Involve your team – build awareness and encourage ideas from all levels of the business for how things can be changed in day-to-day operations.
- Make a commitment – Publicly join initiatives like the SME Climate Commitment 4 to signal intent.
- Measure your emissions – begin by calculating your carbon footprint, with resources found on LCCI’s Sustainability Hub.
- Create a plan – set reduction targets for energy, transport, waste and supply chains. Use SMART goals to ensure these targets are Specific, Measurable, Achievable, Relevant and Time-Bound. For example, don’t set a target to simply “reduce emissions”; try “upgrade all office lighting to LED and install motion sensors by the end of 2026 to reduce electricity consumption by 15%”
- Take action – implement these SMART goals across the business, and start with quick wins, such as switching to renewable electricity, cutting energy waste, and improving recycling.
- Find finance and support – there are many funding options and green grant loans available across the UK 5 to improve the sustainability of small businesses.
- Look beyond your business – engage with your suppliers, partners and customers to drive wider change. Net-zero cannot be achieved alone; we all need to play our part.
Net-zero isn’t just a global challenge; it’s a local opportunity. London’s businesses have a vital role in building a cleaner, healthier, more resilient city. Whether you’re just starting out or ready to accelerate your efforts, the London Chamber of Commerce and Industry (LCCI) is here to support you.
Explore our Sustainability Hub for more information, resources and upcoming events.
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