A useful guide to net zero for small businesses

What is Net Zero?

To tackle climate change and avoid its most serious effects, countries around the world have agreed that greenhouse gas emissions must be reduced by 45% by 2030 (compared to 2010 levels) and brought down to net zero by 2050.

But what does net zero actually mean?

Net zero is when the total amount of greenhouse gases (like carbon dioxide and methane) your business puts into the atmosphere is balanced by the amount taken out. You can remove emissions by planting trees, investing in clean technology, or supporting other nature-based solutions. But the key point is this: net zero starts with cutting emissions as much as possible, not just paying for so-called 'offsets'.

Governments like the UK and Scotland have made net zero commitments. For your business, reaching net zero means looking at everything you do that causes emissions, both directly and indirectly. This includes things like:

• Electricity and fuel use
• Business travel
• The goods and services you buy (your supply chain)

A good first step is to measure your emissions (known as your carbon footprint) and identify where the biggest impacts are. That will help you focus on the right actions to reduce them. See our guide to reducing the carbon footprint of your business.

Carbon Neutral vs Net Zero: what's the difference?

You might have seen businesses claiming to be "carbon neutral." This often means they are paying to offset their emissions - buying credits that support things like tree planting or renewable energy projects - without necessarily reducing their own emissions.

Net zero is different, and much more ambitious.

Here's how:

• Net zero requires deep cuts in emissions first. Offsets should only be used for what can't be reduced, and according to the most commonly-used net zero standard, only after at least 90% of emissions have been cut.
• Net zero offsets must meet high standards and truly remove emissions from the atmosphere, not just avoid adding them.

So, while it might be quicker and easier to claim you're carbon neutral, net zero shows a much stronger commitment to real change.

Setting Net Zero targets

Lots of businesses have now set targets for becoming net zero. But some do so without fully understanding the time, effort, or planning involved.

For almost all companies, the largest share of emissions actually happens outside their own offices or vehicles. It happens in the supply chain - from the production of the materials you buy, or the delivery services you use. These are often called Scope 3 emissions, and they're harder to measure and control.

To succeed, you'll need to work closely with your suppliers, change how you operate, and stay flexible. There are also outside factors - like new government policies or changes in technology - that could make things easier or more difficult.

One helpful approach is to:

• Set a clear long-term goal (like net zero by 2045)
• Break it down into smaller targets (like reducing emissions 25% by 2027)
• Review progress regularly and adapt as needed

Limitations and challenges of Net Zero target setting

Net zero targets aren't always straightforward, especially for small businesses. Here are a few challenges to be aware of:

• Fixed reduction targets can clash with business growth. If your business is expanding, your emissions might go up even if you're becoming more efficient.
• Some businesses have fewer options to cut emissions. If you already work remotely, use green energy, and don't produce goods, there may not be many remaining changes to make.
• There are many sectors that will need to grow in order to help deliver the low carbon transition, such as renewable energy and electric vehicles. Businesses in these sectors might see growth in their own carbon footprints even as they play a vital role in meeting global net zero.
• Data can be hard to find. Especially when it comes to your supply chain, you might not have all the information needed to measure changes in emissions.

Check out our own carbon story, which illustrates some of these issues well.

These issues don't mean you shouldn't act - but they do highlight the need for a flexible, honest approach.

Why it's still worth setting a Net Zero target

Despite the difficulties, setting a net zero target is still one of the most powerful steps your business can take.

Here's why:

• It pushes you to think beyond daily operations and consider your wider impact
• It encourages innovation - new ways of doing business that are more efficient and sustainable
• It shows customers, employees, and investors that you care about doing the right thing
• It can even influence the companies you work with to reduce their own emissions

By setting a target, you're not just reducing your own footprint - you're helping drive change across your sector.

Communicating your target

Being open and honest is one of the most important parts of setting and working towards a net zero target.

Calculating your carbon footprint isn't an exact science, especially for small businesses. Often, you'll need to make assumptions or use estimates where data is missing. That's normal. What matters is that you:

• Say what you've done
• Acknowledge what you don't know
• Explain how you'll improve

The same approach should apply to your net zero target. Many small businesses simply don't have all the answers about how they'll get there - and that's okay. For most businesses, reaching net zero depends not just on internal changes, but also on wider shifts in technology, society, infrastructure, and supply chains.

For others, such as those planning significant growth, a net zero target based on current definitions may be impossible. More appropriate targets may be based on reductions in carbon intensity, such as emissions per unit of turnover.

The key is to be honest and tell that story. Share the steps you're taking, what you think is possible now, and where you'll need support or breakthroughs to close the gap. This transparency builds trust and helps create the bigger picture needed to drive change across sectors.

At Green Business, our carbon footprinting service includes modelling possible emissions reduction pathways for your organisation. We help you explore what's achievable in your specific context and identify what changes will have the biggest impact, so you can set targets that are both ambitious and grounded in reality.

As you progress, you might not meet your short-term goals. That's okay, as long as you're transparent about why, and what you're doing next. Sharing your challenges can actually help others in the same position.

The Net Zero journey is evolving

The guidance around net zero is changing all the time, especially to better support smaller businesses.

For example, the Science-Based Targets initiative (SBTi) - a leading organisation that sets standards for net zero - has recognised that not every business can follow the same path. They're now exploring more flexible approaches that focus on taking action, not just meeting strict numbers. This is long overdue in our view.

In the meantime, we encourage small businesses to ask deeper questions about what they do and why. Does your business model support a low-carbon future? Are your products or services part of the solution?

These are not easy conversations - but they are essential.

Net zero for small businesses is not about being perfect. It's about doing what you can, being honest about what's hard, and aiming high. The more of us that take action - especially in the SME community - the faster we'll build the cleaner, fairer economy we all need.