ERC State of Small business Britain conference 2022 presentation slide deck

1. Supporting the Triple Transition
ERC State of Small Business Britain Conference
2022
@ERC_UK #tripletransition

2. Chair’s introduction and welcome
Lucy Armstrong, Chief Executive, The Alchemists
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3. SESSION 1: The Net Zero Transition
SMEs and the net zero journey
@ERC_UK #tripletransition

4. Introducing the triple transition
Professor Stephen Roper, Enterprise Research Centre
@SteveRop
@ERC_UK #tripletransition

5. Introducing the ‘Triple Transition’
• SMEs globally face two major transitions relating to digitalisation and moves
towards net zero
• However, in the UK:
– OECD data suggests that UK SMEs lag many of our international competitors in terms of
their adoption of digital technologies and the digitalization of business models
– SMEs account for around half of all business emissions in the UK, underlining the
importance of the net zero transition in this group of firms (BBB 2021)
– Many UK SMEs also lag their international peers (and UK frontier firms) in terms of
productivity – the so-called long tail

6. Introducing the ‘Triple Transition’
• The digital and net zero
transition will require significant
new investment in capital
equipment, intangibles, business
models etc.
• This capital enriching and
renewal also creates the
potential for a transition in
productivity
• This defines the ‘Triple
Transition’ in SMEs -
digitalisation, moves towards net
zero, and productivity upgrading.
Productivity
upgrading
Net zero
practices
Digitalisation

7. Enabling the Triple Transition
So how can we shape policy, regulation and the innovation
eco-system to maximise the productivity benefits of the
digital and net zero transition?
Recent ERC research suggests
some synergies:
Digitalisation can support moves
towards net zero; and
Moves towards net zero are
associated with faster SME growth
Hopefully the discussion today provides some further clues
as well as highlighting those areas where we need to know
more

8. SME emissions and attitudes
Matt Adey, British Business Bank
@BritishBBank
@ERC_UK #tripletransition

9. Smaller businesses and the
transition to net zero:
research summary
Matt Adey
Director of Economics
State of Small Business Britain Conference
16th June 2022
• british-business-bank.co.uk
• @BritishBBank

10. • BBB is the UK’s state-owned development bank focused on SMEs
and their finance markets
• Net zero now part of our mission and objectives, following UK legal
target by 2050
• Climate change – need for action is urgent
• Sparse evidence base on (UK) SMEs and net zero (whether on
emissions or progressing actions)
• Developing BBB as a centre of expertise on SMEs and net zero
• Informing the Bank’s net zero implementation plan
- Building our future market offering
• Context of COP26
Our main research tool was a bespoke primary survey with a
nationally representative sample of 1200 SMEs
The final report was published on 21 October 2021
10
Background to the research

11. 11
• Smaller businesses often have
relatively low emissions
• BUT collectively they account for
around half (43-53%) of GHG
emissions by UK businesses
53% 36%
47% 32%
43% 29%
0%
10%
20%
30%
40%
50%
60%
SME % of UK business emissions SME % of total UK emissions
Based on employee count Based on gross value added (GVA) Based on turnover
Estimated share of UK territorial GHG emissions from SMEs
SMEs account for around 50% of UK business emissions

12. • SMEs given a maturity score based on their:
- Net zero awareness and engagement
- Knowledge and capabilities
- Physical actions
• More than half (57%) of firms report reasonable
awareness of key net zero concepts
• Current maturity mix reflects that around half (53%)
are not yet ready to prioritise decarbonisation
• On physical actions, 94% have taken at least one
action, though these tend to be simple
Most UK smaller businesses are at an early stage in their
transition to net zero
12
2%
21%
55%
21%
0% 10% 20% 30% 40% 50% 60%
Maturity
level 4
Maturity
level 3
Maturity
level 2
Maturity
level 1
Share of SMEs at each maturity level

13. 13
• Personas show groups
demonstrating commonalties
• Using observed firm
characteristics (sector, size
by number of employees),
drivers and emissions
• They will help in developing
targeted policy solutions
SME net zero personas - summary
Attitudes vary amongst smaller businesses with some more
proactive than others

14. • Costs the most significant barrier
(35%), especially upfront costs;
followed by feasibility (32%) including
lack of control
• For actions taken, the most common
driver by far was ‘made financial
sense’
• Most helpful levers were tax
incentives, external finance (incl.
grants) and clearer regulations 18%
32%
35%
12%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Capacity/willingness
Feasibility
Costs
Information
Barriers to net zero actions, grouped by broad type
The most commonly perceived barriers are around cost and
feasibility
14

15. • Over 20 types of barriers
identified
• Costs the most significant
barrier, especially upfront costs
• Followed by feasibility,
including lack of control
15
4. The most commonly perceived barriers are around
cost and feasibility

16. • More than 1 in 10 have accessed
external finance for net zero actions (=
700k firms)
• 1 in 5 are willing to consider external
finance to support net zero action (=
1.3m firms)
• This is half of the firms that are happy to
borrow to grow (37%)
• 39% of UK Network intermediaries say
inadequate supply of finance dedicated
to net zero in their region
Likely/unlikely sources to fund future net zero actions
Access to finance is part of the solution to drive more action
16
3%
6%
20%
22%
55%
58%
96%
94%
79%
77%
43%
41%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Equity investors
Friends and family investment or loans
Loans from banks or other lenders, incl.
recent government-backed COVID loans
Investment or loans from owners or
directors
Internal retained cash or profit
Grants
Likely Unlikely

17. 5 key headlines
1. SME emissions: c. 50% of industrial GHG emissions, c. 30% of total UK
2. The transition journey: SMEs are at an early stage in their transition to net zero
3. Personas: Attitudes vary amongst smaller businesses with some more proactive
than others
4. Barriers: The most commonly perceived barriers to action are around cost and
feasibility
5. Financing action: Access to finance is part of the solution to drive more action
17

18. Developing sustainability in deep-tech SMEs
Tanya Sheridan, Royal Society of Chemistry
@RoyalSocChem
@ERC_UK #tripletransition

19. Developing
Sustainability in
Deeptech SMEs
Tanya Sheridan,
Royal Society of
Chemistry
16th June 2022
19

20. These businesses develop technologies that:
• are novel and significant technological
advances;
• may have the power to create their own
markets or disrupt existing industries;
• require concerted R&D to develop practical
business or consumer applications and bring
them from the lab to the market;
• may help to address big societal and
environmental challenges;
• are based on underlying chemistry IP, skills
or methods, which are a barrier to entry for
other businesses.
Defining Deeptech SMEs
20

21. Recent research by ERC highlights the role of
deeptech chemistry SMEs in sustainability
21
https://www.rsc.org/new-
perspectives/discovery/the-
case-for-supporting-uk-deep-
tech-chemistry/

22. Case study 1: Oxford PV driving sustainability
by developing more efficient solar cells
22

23. Case study 2: Echion driving sustainability
through rapid charging battery technology
23
Other examples:
ViridiCO2 ltd -
Carbon Capture
Utilisation
Mimica – advanced
food labelling
TFP Hydrogen
Products Ltd – Green
Hydrogen

24. • access to finance;
• access to bespoke, affordable
chemistry facilities;
• innovation leadership and
management skills;
• ecosystem and
resources/networking.
However, we know deeptechs face a range of challenges in
successfully commercialising ideas for a more sustainable planet.
24

25. The Royal Society of Chemistry wants to work with
others to help deeptech chemistry SMEs succeed
25

26. Questions
@SteveRop
@BritishBBank
@RoyalSocChem
@ERC_UK #tripletransition

27. SESSION 1: The Net Zero Transition
Supporting sustainability in SMEs
Chair: Professor Nola Hewitt-Dundas, Queens University Belfast @profnola
 Jane Galsworthy, Oxford Innovation @janegalsworthy @OI_Advice
 Jonathan Withey, Planet Mark @jonathan_withey @ThePlanetMark
 Paula Ritchie, NatWest @paula_ritchie @NatWestBusiness
@ERC_UK #tripletransition

28. Lunch
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29. SESSION 2: The Digital Transition
Making the digital transition:
business case studies
Chair: Professor Mark Hart, Enterprise Research Centre
@markhart84
 Darren Joint, Viking Signs @darrenjoint @VikingSigns
 Kavita Parmar, Word360 @KavEater @WORD360
 John Cushing, mnAI @ThisIsmnAI
@ERC_UK #tripletransition

30. SESSION 2: The Digital Transition
Supporting SMEs with the digital transition
Chair: Lucy Armstrong, The Alchemists @lvwa
 Mark Swift, Warwick Manufacturing Group @kramix @WMGSME
 Karen Licurse, Digital Boost @karen_licurse @digitalboost_UK
 Daniel Harrison, Department for Business, Energy and Industrial
Strategy @beisgovuk
@ERC_UK #tripletransition

31. Coffee break
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32. SESSION 3: The Productivity Transition
Keynote address:
What are the priorities for small businesses?
Liz Barclay, Small Business Commissioner
@SB_Commissioner
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33. SESSION 3: The Productivity Transition
Lessons from UK Business support
programmes
In conversation with Professor Mark Hart
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34. SESSION 3: The Productivity Transition
Unlocking SME potential after the pandemic
Professor Mark Hart, Enterprise Research Centre @markhart84
 Professor Jun Du, Aston University @jundu1mecom
 Professor Bart Van Ark, Manchester University @bart_ark @TPIProductivity
 Kitty Ussher, Institute of Directors @kittyussher @The_IOD
@ERC_UK #tripletransition

35. Supporting the Triple Transition
Closing remarks
Professor Stephen Roper, Enterprise Research Centre
@SteveRop
@ERC_UK #tripletransition

36. Upcoming attractions !

37. Upcoming…
• Business Futures 2022 - net zero
transition and community
engagement
• Mental Health and Productivity
2022 (wave 3)
• IP and innovation in small firms
Social or community benefits: strategy
and action

38. For further details please visit :www.enterpriseresearch.ac.uk
Thank you
@ERC_UK #tripletransition
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