Britain's transition to net zero presents huge opportunities for small businesses in the country, despite many firms grappling with pandemic-induced challenges such as higher energy prices, says Andrew Griffith, the UK climate action business champion.
Shifting to a low-carbon economy is the “transition of our generation”, Mr Griffith told a seminar hosted by British think tank Policy Exchange. He added that he was “very conscious” of all of the headwinds small businesses have faced in recent months — from the Omicron variant of coronavirus to the supply chain crisis.
“Net zero will be disruptive for small businesses, but that makes a great opportunity, because small businesses tend to be some of the most dynamic, and the businesses that can move first when things change,” Mr Griffith said.
“Some of the small businesses today that operate in this low-carbon space or are providing solutions are going to be very large businesses in the future and that’s incredibly important as we try to build a dynamic, science-based, superpower economy that seeks to make the most advantages of the green industrial revolution.”
Mr Griffith said one of the biggest challenges small business owners face is the fact they are “time limited” with a high opportunity cost on the time of founders.
“I would urge small businesses to engage in this. There are an increasing number of places that they can go to get support as the big challenge with small businesses is often finding out what's there,” he added.
“It's easy if you're a big business: you've got a sustainability department, you've got procurement departments, you can you can crunch through this. But it’s much harder for small businesses to know where to start.”
Britain has put itself front and centre of the shift to net zero, with Prime Minister Boris Johnson unveiling a 10-point plan for a greener economy in November 2020 with a pledge to invest £12 billion in the transition away from fossil fuels.
In October last year, weeks before the UK hosted the Cop26 environmental summit in Glasgow, Britain’s Chancellor of the Exchequer Rishi Sunak set out a vision of Britain's future as a global science and tech superpower in his autumn budget, with pledges to boost research and development, incentivise green investments and attract overseas talent.
The UK’s commitment to net-zero emissions is also considered the economy’s best chance of levelling up the country, with Mr Johnson saying in November that government and business working in partnership on the challenge will tackle the “woeful imbalance in productivity across the country".
Mr Griffith said while the government’s job is to sketch out the country’s long-term green goals, there comes a point where they must look to the “ferocious problem-solving of business … to bring forward solutions and do the heavy lifting from here to there”, in turn unleashing entrepreneurs into the economy.
However, Martin McTague, national vice chairman of policy and advocacy at the Federation of Small Businesses, said the priority for many small businesses right now is “survival” because of the tough conditions faced during the Covid-19 crisis.
While small businesses in sectors such as non-essential retail, hospitality and entertainment were forced to close their doors during the series of lockdowns Britain has faced, the challenges have not gone away since reopening.
Fresh hurdles include labour shortages, with job vacancies surging to a record 1.25 million in the fourth quarter of last year, as well as supply chain disruption caused by global challenges, such as the lack of semiconductors and the UK’s dependence on international trade.
The country's reliance on natural gas imports for heating and electricity generation, for example, has seen domestic gas prices skyrocket, with higher energy prices pushing inflation up to 5.4 per cent in December — the highest level since 1992.
Energy bills could increase again in October after a predicted 50 per cent jump for millions of households in the spring when the energy regulator Ofgem raises the price cap, Emma Pinchbeck, chief executive of Energy UK, the trade body for suppliers, said in a separate seminar.
Ms Pinchbeck said bills were expected to rise not only in April but again in October “if nothing changes”, as the spike in wholesale gas prices fed through to domestic bills.
“We haven’t seen anything like this, not in my career or in any of the people who sit on my board,” she said.
Although wholesale prices were expected to drop, “they are still three times higher than we expect to see at this time of the year” and described the situation as “enduring”.
Mr McTague said the situation was “a major concern” for the climate change drive “because some businesses have come through the pandemic in a pretty weak state and are now facing a big hike in energy prices".
“That then pushes down any attempts to lower their carbon footprint down the agenda,” he added.
However, Mr McTague said there is major enthusiasm among small business owners about the transition, with plenty of goodwill and a desire “to do their bit”.
“The problem is that most of them just say, well, I need more information. I'm not really sure what I do next,” he added.
The lack of information and clarity is creating missed opportunities for the government, Mr McTague said, pointing to the government’s push to get households to adopt heat pumps to replace gas boilers.
The plan, first unveiled in October, included the government offering grants of £5,000 to British households to replace their gas boilers with low-carbon heat pumps in an effort to cut emissions from homes and comply with a UK goal for all new heating systems to be low carbon by 2035.
“If you look at something like heat pumps, it's pretty clear that although the ambitions are very big, 600,000 heat pumps a year, there is a bit of a market failure going on at the moment,” said Mr McTague.
“Unless you lower the risk for entry for a lot of SMEs, that market is going to stall at its current level.”
Small business owners that want to invest in electric vehicles are also struggling with the implications of doing so and how it might affect their tax position if they replenish staff who use EVs for their business needs.
Instead, Mr McTague said companies need clarity on how to transition their businesses.
“A lot of people are looking to the government to say, 'Can you clear this thicket of problems out the way so that my decisions are a lot simpler?' Then when it comes to the big hikes in energy prices, that just makes one more obstacle on the way.”
if you go
The flights
The closest international airport to the TMB trail is Geneva (just over an hour’s drive from the French ski town of Chamonix where most people start and end the walk). Direct flights from the UAE to Geneva are available with Etihad and Emirates from about Dh2,790 including taxes.
The trek
The Tour du Mont Blanc takes about 10 to 14 days to complete if walked in its entirety, but by using the services of a tour operator such as Raw Travel, a shorter “highlights” version allows you to complete the best of the route in a week, from Dh6,750 per person. The trails are blocked by snow from about late October to early May. Most people walk in July and August, but be warned that trails are often uncomfortably busy at this time and it can be very hot. The prime months are June and September.
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Director: Maggie Gyllenhaal
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
Roll of honour 2019-2020
Dubai Rugby Sevens
Winners: Dubai Hurricanes
Runners up: Bahrain
West Asia Premiership
Winners: Bahrain
Runners up: UAE Premiership
UAE Premiership
}Winners: Dubai Exiles
Runners up: Dubai Hurricanes
UAE Division One
Winners: Abu Dhabi Saracens
Runners up: Dubai Hurricanes II
UAE Division Two
Winners: Barrelhouse
Runners up: RAK Rugby
UAE currency: the story behind the money in your pockets
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Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Martin Amis,
Jonathan Cape
The specs
Engine: 2.0-litre 4-cyl, 48V hybrid
Transmission: eight-speed automatic
Power: 325bhp
Torque: 450Nm
Price: Dh359,000
On sale: now
Without Remorse
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Starring: Michael B Jordan
4/5
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• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
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GIANT REVIEW
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Rating: 4/5
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Rating: 1/5
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Producer: Ronnie Screwvala
Director: Akarsh Khurana
Starring: Irrfan Khan, Dulquer Salmaan, Mithila Palkar
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Other acts on the Jazz Garden bill
Sharrie Williams
The American singer is hugely respected in blues circles due to her passionate vocals and songwriting. Born and raised in Michigan, Williams began recording and touring as a teenage gospel singer. Her career took off with the blues band The Wiseguys. Such was the acclaim of their live shows that they toured throughout Europe and in Africa. As a solo artist, Williams has also collaborated with the likes of the late Dizzy Gillespie, Van Morrison and Mavis Staples.
Lin Rountree
An accomplished smooth jazz artist who blends his chilled approach with R‘n’B. Trained at the Duke Ellington School of the Arts in Washington, DC, Rountree formed his own band in 2004. He has also recorded with the likes of Kem, Dwele and Conya Doss. He comes to Dubai on the back of his new single Pass The Groove, from his forthcoming 2018 album Stronger Still, which may follow his five previous solo albums in cracking the top 10 of the US jazz charts.
Anita Williams
Dubai-based singer Anita Williams will open the night with a set of covers and swing, jazz and blues standards that made her an in-demand singer across the emirate. The Irish singer has been performing in Dubai since 2008 at venues such as MusicHall and Voda Bar. Her Jazz Garden appearance is career highlight as she will use the event to perform the original song Big Blue Eyes, the single from her debut solo album, due for release soon.
