Small and medium sized enterprises (SMEs) are not yet on the path to net zero. There are well over 1 million of them in the UK in independent premises. For policy makers they are both hard to reach and easy to avoid.
SMEs in the UK are responsible for about half of business energy use and the related greenhouse gas emissions. The International Energy Agency has estimated that cost-effective energy efficiency measures could reduce worldwide SME energy consumption by 30 per cent.
“SMEs in the UK are responsible for about half of business energy use and the related greenhouse gas emissions.”
Peter was drawn to help build understanding of the SME landscape and has chosen to focus on artisanal bakery enterprises. The title of his PhD thesis is Artisanal Bakery Enterprises: Finding a Path to Net Zero. As both ‘makers’ and ‘sellers’ they carry out activities that may chime with many other SMEs in the wider population. The PhD generated new qualitative and quantitative evidence about these relatively energy intensive and hard to reach small businesses. It examined artisans’ energy related activity and decision making.
Bridging the research gap
The research gap was addressed by collecting granular detail and revealing themes that might inform policy development and further research. A grounded theory mixed-methods research design was adopted to develop and refine the approach.
12 artisans/representatives and one adviser from England and Scotland were interviewed in depth. Separately the population of artisanal bakery enterprises in Inner London was subject to an observational survey: 140 premises were found. In an innovation the survey data was matched with administrative data on the individual premises’ energy consumption and area.
The results of the survey
The research found that artisanal bakery enterprises were often using electricity energy relatively intensively, about six times greater than for the median UK SME, whilst gas usage was similar. A range of energy efficiency was observed: 40% of the interview sample had energy costs per unit twice or more those at the best performing enterprise.
The themes
Three main themes explained energy-related decision-making
- artisanal values, particularly in respect of renewable energy
- the enterprise operational cycle in decisions about investment in equipment
- standard business or economic objectives were also important for some artisans, particularly when expanding their enterprises and responding to price signals, however, under-capitalisation was a problem.
Implications for policy-making
The characteristics underlying the themes were analysed in a theory neutral framework to help structure an effective policy package. It would:
- stimulate the concerns of artisans by highlighting the poor standard of their equipment and disincentivise switching to natural gas
- recognise the conditions that apply to the enterprise – particularly the points in the enterprise operational cycle conducive to changes in equipment and techniques
- support artisans’ capacities by improving access to affordable capital
- leverage artisanal enterprises to act as local hubs for an equitable transition to net zero