SMEs make up more than 99% of businesses in the UK. They make up half of private sector turnover and almost two thirds of UK employment. But alongside these huge positive contributions to the British economy, SMEs unfortunately also make a substantial contribution to businesses' environmental footprint: 50% of all commercial carbon emissions. SMEs make up more than 99% of businesses in the UK. They make up half of private sector turnover and almost two thirds of UK employment. But alongside these huge positive contributions to the British economy, SMEs unfortunately also make a substantial contribution to businesses' environmental footprint: 50% of all commercial carbon emissions. As the drive to look to renewable sources of energy, and “go green” has grown in recent years, businesses nationwide are trying to find more ways to become environmentally responsible, and alongside the benefits to the planet, switching to greener alternatives could also give businesses an opportunity to benefit their bottom line. However, a lack of access to non- domestic smart meters, as well as a lack of commitment and investment by some SMEs themselves, is hindering the development of innovative solutions for energy sustainability and efficiency. Businesses will need to find more ways to improve their approach to sustainability and utilise renewable energy, such as employing legal means and agreements, relying on smart energy services and using innovative business models in order to cut their energy costs and carbon emissions.
rated less than E. At present, there are proposals for the Minimum Energy Efficiency Standards for newly rented commercial buildings to rise from E to C in 2025 and then to B by 2030. If the proposals proceed as planned then 85% of non-domestic rental properties will need to improve energy efficiency by 2030 or landlords will be prohibited from leasing them. But landlords are often reluctant to invest in energy saving measures - after all it is their tenant who will receive the financial benefits, such as lower energy bills. Despite the strong case for cost saving, the Boosting Access for SMEs to Energy Efficiency (BASEE) programme identified that only a minority of landlords or SMEs had invested in improving the energy efficiency of their properties, whilst some lease agreements even limited the actions a tenant could perform. Compounding this problem, it is also more difficult for SMEs to access cheaper finance to fund energy efficiency upgrades - granting them loans is seen as fundamentally more risky due to their weaker credit ratings and uncertain business longevity. Even when SMEs can eventually go forward with improvements, there are no standards or requirements to guarantee quality control for non-domestic energy efficiency measures, with the varying quality between providers and installations not always subject to due diligence procedures.
The Challenge for Developers
The BASEE project found that a large proportion of developers making energy services for SMEs needed them to have smart meters. However, only around 12% (168,000 out of 1.4 million) of non-domes- tic properties currently use them, and with information on deployment rates across certain areas or geographic lo- cations being unobtainable, developers have had difficulties finding out which businesses belonged in that small group.
Landlords and SMEs – The issues they face
Unless a valid exemption is in place, it is unlawful to let a commercial property with an EPC rating of less than E and since April 2023 it has also been unlawful to continue to let a commercial property with an EPC
THE LEGAL CORNER MAGAZINE | ISSUE 005 SEPTEMBER '23 | PLANNING, OWNERSHIP & THE ENVIRONMENT HB 12
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