Building a greener future for us all

In June 2019, the Government set in motion one of the biggest challenges the UK has ever faced, as it committed to reducing our net greenhouse gas emissions by at least 100% by 2050, compared to 1990 levels.

Reaching these ambitious targets in Northern Ireland will take significant effort from industries, organisations and individuals all working together to cut their carbon emissions to help reduce the effects of climate change.

Last September, Prime Minister, Rishi Sunak announced a more ‘pragmatic, proportionate and realistic’ approach to achieve net zero as he softened the approach to the phasing out of gas boilers and when a ban on the sales of new petrol and diesel cars would come into force.

However, he stressed that he was ‘absolutely unequivocal’ about staying on the path to net zero by 2050.

Smaller businesses have a critical role to play in the transformation. Through our own research, we estimate that collectively they account for around half (43–53%) of greenhouse gas emissions by UK businesses.

Moreover, we found that 27% of smaller businesses are ‘transition exposed’, accounting for 98% of the UK’s smaller business emissions. The net zero transition also creates business opportunities, including in the innovation of climate solutions, adoption of low-carbon practices and technologies and enabling the decarbonisation efforts of customers

Northern Ireland has a proud history of innovation with a global impact. As we look to new technologies which will help build a greener future, we are at the forefront of a number of sectors, which is why the Bank is pleased to launch the Northern Ireland Investment Fund to increase the supply and diversity of early-stage finance for smaller business.

Notably, with 11% of UK small businesses having already accessed external finance to support net zero actions and 22% saying they are prepared to do so in the next five years, there appears to be an appetite to make the transition.

An important element of smaller businesses being able to take action to transitioning to net zero is access to external finance.

A survey of 1,200 smaller firms by the British Business Bank found that 35% believed cost is a significant barrier to action when it comes to net zero, with 21% citing the upfront costs as the biggest obstacle.

We know external finance is an important tool for smaller businesses to promote growth and stability and there are options in Northern Ireland for both debt and equity finance – what perhaps needs more work is the process of raising awareness and signposting businesses to that support.

Other Bank research, its recent Nations and Regions Tracker, also finds that the use of external finance in Northern Ireland was showing signs of recovery in 2022 with 38% of smaller businesses utilising it – although most continue to favour traditional forms of finance.

More work needs to be done to inform business owners of the different types of finance available and which will work best for them.

Without access to the right mix of finance, entrepreneurs in Northern Ireland are potentially being held back and not in a position to realise their growth ambitions.

Despite the drop in deal numbers, the equity funding ecosystem in Northern Ireland is reasonably strong and non-domestic investors are increasingly keen to do business here.

Better flows of equity have the potential to form clusters around net zero innovation. Such clusters could attract increasing numbers of skilled workers, other firms, and finance providers, really building on Northern Ireland’s emerging green technologies.

Resolving geographic finance disparities is becoming increasingly important as the net zero transition becomes more prominent.

And this is where, our £70million Northern Ireland Investment Fund will offer a range of commercial finance options with loans from £25,000 to £2m and equity investment of up to £5m. It will support businesses from all sectors in Northern Ireland and at different stages of their growth journey.

The old saying about the rising tide rings true as I believe positive returns on the fund will encourage other funds to focus on Northern Ireland.

We have some really innovative companies here, companies who I am convinced will play a central role in the drive to net zero.

By backing these companies with the finance they need, I have no doubt it will have a very positive impact on the work they are doing and help attract more investment into the country.

The British Business Bank is committed to supporting smaller businesses make the transition to net zero, unlocking their potential and ultimately powering Northern Ireland’s position as a key player in creating a greener future for us all.