Environmental considerations play a critical role in rural businesses’ decision-making, however, barriers exist which prevent them from fully transitioning to net zero, according to a major new survey from the National Innovation Centre for Rural Enterprise (NICRE).
Four out of 10 rural businesses ‘always’ consider the environment when making decisions with 57% taking action to reduce environmental impact, but almost half (45%) report barriers such as high costs, lack of information, and uncertainty in local support and demand.
The findings from NICRE’s State of Rural Enterprise Report Rural SMEs and the environment call for greater support for rural businesses to decarbonise just as COP28 comes to an end.
NICRE Deputy Director Kevin Mole, Associate Professor of Enterprise at the Enterprise Research Centre, which led the report, said: “With businesses being urged to play their part in the Government’s drive to net zero, our findings that rural firms consider the environment and are taking steps to reduce their carbon footprint are encouraging.
“But our evidence of the barriers they face putting measures in place highlights the need for enhanced support systems and resources to help these businesses overcome these hurdles.”
Of the rural businesses taking environmental action, the most common practice is recycling waste, water, or materials (90% of firms). Less common measures include introducing new or improved production processes (46%) or low-carbon products or services (38%) and few put in place environmental certification (14%) or measure emissions using an online calculator (3%).
NICRE’s survey found the perceived benefits of sustainability actions differ between rural and urban businesses with the latter often citing positive reputational gains, improved employee skills, stronger financial performance, and other employee-related benefits. Rural businesses emphasised innovation and market-related advantages as the primary outcomes of their environmental actions.
Dr Mole added: “These disparities, which perhaps reflect a more competitive urban labour market, indicate that tailored strategies may be required to suit the unique characteristics and needs of businesses in both rural and urban contexts.
“Overall, our research underscores the importance of continued efforts to promote environmentally-conscious decision-making and support for businesses across different settings. It is not enough to encourage firms to take the first steps; firms need to climb the ‘ladder’ of environmental actions.”
The report is the second to be published from NICRE’s survey of rural businesses over the summer and follows The cost-of-doing-business crisis: rural impacts and adaptation released last month.
Stroud Brewery in Gloucestershire is one rural business which is embracing the transition to net zero. The environment is a major part of its ethos and up to a quarter of its electricity is generated from solar panels on its roof thanks to an arrangement with its landlord.
Greg Pilley, Managing Director, said: “Environmental impact has always been at the forefront of my thinking and our business. Ultimately the reason we want to mitigate climate change is to support biodiversity and, as an organic brewery, we support a farming method that encourages that in our countryside.
“To improve energy efficiency, our first step has been to do a carbon footprint to measure what our impact is and where we’re using that power. We’ve done that for three consecutive years and in terms of electricity, gas and water use, when we benchmark against similar-sized businesses, we’re not doing too badly.
“The question is then, as a responsible business, how in the future might we offset or further reduce. There’re going to be diminishing returns on those small incremental improvements so ultimately we’ll be looking to offset, or our preference is actually to inset by looking at our supply chain and how we might help our suppliers reduce, or encourage them to reduce, their impact.”
The report has received support from the Rural Services Network (RSN).
Kerry Booth, RSN chief executive, said: “We welcome NICRE’s latest State of Rural Enterprise report on rural SMEs and the environment. Understanding the needs of rural businesses in relation to net zero and the circumstances in which they operate is vital to be able to find solutions that meet their needs.
“We want the rural economy to not only maximise their opportunities from a business perspective but also be part of the journey to net zero. The report highlights barriers firms face to taking action including high costs, a lack of information and uncertainty in local support and demand. Improved support systems targeted for rural businesses are therefore needed to help remove these.”