‘It’s the soft stuff that’s hard’: the challenging role of low carbon SME advisors in the UK

September 28, 2017 / Research /

Low Carbon SME sustainability advisors PhD Infographic

Background

The 3rd paper I am writing for my PhD focuses on the role of ‘middle actors’ in energy policy. Research has shown that Small and Medium sized Enterprises (SMEs), who represent 99% of all businesses worldwide, are responsible for 64% of all environmental impact in the EU.

However, they are often excluded from conventional policy ‘hard levers’ such as environmental regulation and taxation, on the basis that ‘red-tape’ should be minimised for smaller businesses. The preferred approach to encouraging SMEs to reduce their environmental impact are incentive-based policies including publicly funded grants and access to expert advice and support. Under this model, the role of the low carbon advisor becomes crucial.

Aims

Despite the scale of SMEs’ environmental impact and the preference for incentive-based policy, there is very little academic research which looks at the role of low carbon advisors. This paper provides an in-depth account of the practices and experiences of these critical middle actors, asking: ‘is low carbon business support for SMEs fit for purpose?’

Methods

For this paper I draw on two main sources of data. 1) I have spent 12 months as a low carbon advisor in Oxfordshire, supporting SMEs to become more resource efficient. 2) I interviewed 19 other UK based low carbon advisors. 15 were publicly funded, providing energy audits and grants for measures such as replacement lighting, insulation or renewable energy. 4 were from the private sector: a business park landlord, an energy broker, and two general sustainability advisors.

Findings

Perhaps the most important finding from this research is that the role of a low carbon advisor is far from easy!

The first problem is engaging businesses with environmental projects in the first place. 5 main reasons this is so difficult came out of interviews:

  1. SMEs are extremely diverse.
  2. Energy is not strategically important for most businesses
  3. Some SMEs feel defensive about their environmental impact and tend to under-estimate their impact
  4. Energy or environmental management is no single person’s responsibility in SMEs
  5. There is low level of awareness, knowledge and interest in low carbon technologies or pro-environmental behaviours

Because of these challenges, most advisors tend to promote their advice and grants using marketing and advertising which emphasises the cost-savings opportunities. One advisor said:

‘Every time I speak to businesses I tell them they can save money, that’s the main focus. I know the business is not going to be that interested in being green. Even though they should, it’s just one of those things.’

The second set of challenges for advisors come after the SME has been initially engaged:

  1. There is an overwhelming range of options for businesses to reduce their environmental impact.
  2. Comparing these options and predicting their impact can be very complex, and even impartial experts can disagree on what steps are best, and how to measure them.
  3. SMEs ideally need hand-holding all the way from initial engagement, through to investment, installation and measurement. This is time consuming, expensive, and demands a range of technical expertise and softer skills on behalf of the low carbon advisor.

Findings showed that the majority of projects are primarily technical. Advisors might visit an SME to conduct an energy audit and write a thorough written report with costed recommendations, but no action is then taken by the SME:

‘I’ve seen 10 billion projects start and fail because all they do is go in and do an audit, write a report, leave a report, walk away. Nothing happens and I get absolutely infuriated because it is not just information failure, it’s a wider, more complex market failure.’ (NS)

Advisors are aware that ideally they would develop a more in-depth relationship with SMEs, but as one interviewee said: ‘its the soft stuff that’s hard’. In order to have conversations which go beyond the cost and technical focus, advisors need to have range of soft skills:

‘Securing that agreement to start a journey, to go and have a look at a business and to identify things that are not going well, and things that could be improved, is a delicate process to go through. You need advisors who can influence and who can manage change.’ 

The third challenge comes from the context of business support policy in general. Funding for low carbon projects is awarded by Local Enterprise Partnerships, who have a primary objective of delivering economic growth and creating new jobs. In keeping with this, projects tend to be delivered by organisations such as Chambers of Commerce and County Councils which have a track record of providing general business support, but who might not have a long track record of engaging SMEs on the sustainability agenda. Finally, funding rules and targets are set and audited in central government by the Department for Communities and Local Government, whose staff are unfamiliar with low carbon accounting methodologies and the practicalities of sustainable business.

Advisors complained that this policy context presented them with a set of obstacles:

  • The focus on growth encourages businesses to buy new products and technologies, rather than analyse and minimise their own impact
  • low levels of environmental competence amongst policy stakeholders
  • misaligned targets and little guidance about carbon footprint methodologies
  • artificially compartmentalised funding rules
  • short timescales for funding
  • frequent restructuring of business support governance

Discussion – Opportunities for a new culture of advice-giving

Despite being expensive, policy makers tasked with trying to support SMEs to reduce their environmental impact favour face-to-face meetings, workshops and on-site energy audits. The findings of this study showed that the majority of interactions between advisors and SMEs are technical. Visits are usually focused on buildings, calculating payback assessments, and identifying ‘quick wins’ and ‘low hanging fruit’.

However, face-to-face meetings are unique opportunities, which could be more effectively used to engage owner-managers in more meaningful and far-reaching conversations. With a shift in the culture of advice-giving, alternative conversations could cover topics such as corporate responsibility as a whole, the organisation’s founding principles and values, and its long term role in an environmentally sustainable society.

Findings from interviews and participant observation demonstrated that ‘softer’ engagements do occur in some cases, but require a range of skills on behalf of advisors, mutual trust and buy-in from SMEs. One advisor suggested that technically focused energy assessments offer an opportunity to initiate relationships with SMEs, who may then be recruited to join low-carbon networks. This could be then be the start of a journal from awareness, to action, to advocacy.

Conclusion

This study is the first of its kind to put the spotlight on publicly funded advisors, providing low carbon advice and expertise to SMEs. It is perhaps surprising that despite offering free advice and grant funding, their job is a difficult one.

Reaching SMEs through low carbon initiatives is difficult, when energy is relatively inexpensive for most SMEs, and owner-managers’ consider their environmental impact to be minimal. Choosing the best options for reducing carbon emissions is also far from easy, and it can be easier to focus on technical aspects of buildings and technologies than on the broader meanings of energy and corporate values.

Given the scale of SMEs’ environmental impact and the preference for incentive-based policy over regulation and taxation, low carbon advisors are shouldered with enormous responsibilities. Despite the best efforts of talented and widely-skilled individuals, the current provision of low carbon business support is not likely to deliver emissions savings in line with national decarbonisation targets.

These middle actors deserve to be supported by evidence-based, people-centred policy with a broader scope than the growth-oriented model of conventional business support. By providing an in-depth account of their practices, this study has provided the foundations for more research, debate and policy development.