Perseus is supporting UK SME decarbonisation efforts by unlocking green finance from banks and lenders. It does this by automating access to assurable data to support lending decisions and related sustainability reporting.
The Perseus pilot – in which banks will allow Perseus monthly emissions information to be used in the decision making process for one or more green loans – represents a huge step towards automating reporting for UK SMEs, bridging the gap between real-world energy data and financial decision making.
We’re speaking to those involved in Perseus – from Banks, Carbon Accounting Providers, non-profits and policymakers – to explore what the pilot will mean for their business, their customers, and the broader net-zero transition.
In our latest conversation, Conrad Langridge from Sage discusses the challenges SMEs face in carbon reporting, particularly around education, data accuracy, and complexity. Through Perseus, Sage aims to simplify these challenges, enabling SMEs to easily track their emissions through smart meter data and detailed analysis, helping businesses save money and reduce their carbon footprint.
Timestamps
00:00 – Introduction to Conrad Langridge and Sage Earth
01:00 – Sage’s net-zero strategy overview
02:40 – How Sage supports SMEs on carbon accounting
03:22 – Common struggles SMEs face in carbon emissions reporting
07:30 – The shift from traditional accounting to carbon accounting
08:54 – Sage’s role in educating SMEs and accountants in carbon accounting
09:53 – Advantages of smart meters for SMEs
13:00 – The value Perseus brings to carbon accounting providers: Granularity & Accuracy
16:30 – The wider adoption of smart technology and data sharing trends
19:00 – Conrad’s experience and perspective on Project Perseus’s organisation and momentum
Transcript
Conrad: Conrad Langridge from Sage, the accounting, HR and payroll software company that you all know and love. Probably recognised from the Rugby if you’ve been watching that recently. But I work for Sage Earth, which is the carbon accounting sort of body or business unit within Sage. So, yeah. So Sage carbon accounting, it’s as the sort of name suggests, it’s a carbon accounting solution, which helps businesses better understand their environmental impact and sort of start to build strategies on how they can reduce their impacts. Yeah.
Ross: Yeah. No. Really interesting. And you’re sort of going into it there, but could you go more in depth on, you know, Sage’s plans in the net zero space? For yourself, you know, in terms of carbon carbon emissions.
Conrad: Yeah. So if we’re looking if we think about Sage’s net zero strategy, it largely sort of falls into two buckets. One is getting Sage to net zero. So these are looking at all of the you know our offices, how we commute, all of those sort of things, which probably make about 20% of our emissions. Then the two big buckets are: the use of our products, so people actually using Sage solutions and then also our suppliers. So all of the people we spend money with, marketing agencies, office management, that sort of stuff. So we’ve got that’s one part of our strategy. But we’ve also got SMBs to net zero so this is looking at small businesses and small and medium sized businesses and understanding their impact on the planet. And we’ve worked out that the emissions of our customers alone is in the tens of thousands of orders of magnitude greater than Sage’s impact. So, you know, we obviously work with businesses across all different sectors. But, just a few thousand construction companies is going to have a greater impact than a big software company. So yeah, so we’ve got this big opportunity to support small and medium sized businesses across the globe. And that’s sort of one of our biggest parts of our sustainability strategy is doing just that. Not only are we offering carbon accounting, carbon footprinting functionality to SMBs directly through Sage Earth or Sage carbon accounting, but we also do it through an API service. So we’ve been working with a number of banks including NatWest, who are part of the project Perseus initiative, and we work with others as well. So we’re offering those carbon accounting API services to sort of a broader range of enterprise businesses and banks.
Ross: Yeah, that’s really interesting. On that, I was going to ask, you know, what problems do SMEs come to you with when they’re trying to report their emissions? What kind of things do they struggle with?
Conrad: Yeah. So thinking about SMEs and where they struggle from a net zero or carbon accounting perspective, education is probably the biggest piece. We went to Accountex a couple of years ago and we polled their generally accountant audience there, but also includes sort of businesses. Everyone, nearly everyone knew climate change. A few knew net zero. But then as soon as you get into the sort of the sort of language which you really need to know about things like scopes and carbon accounting, people didn’t understand that terminology. And really, to build a sustainability strategy, you need a bit more of a sort of an understanding in terms of education. So education is a big piece. Money is a blocker, but it’s not often the biggest blocker from my view. The blocker is, the education and understanding of how to use the software and what information to capture. And then the nuance on all of the details, which goes into like building a strategy and understanding which parts of your carbon footprint are really material, so where you want to focus your energy. So that’s, I guess, where they struggle.
But using a tool like ours. We’d like to think the process is nice and simple. We take them through that journey. We also have a net zero hub, which does that sort of upfront educational scene setting and building the business case. But yeah, the tool really, as I say, hopefully takes them through that journey to make it easier, but then also gives them the hotspot analysis, which allows them to see which areas of their business have the material impact. So I think that’s where actually the biggest learnings come for small and medium sized businesses. Suddenly they can see where they actually need to focus their energy. And I think from a Perseus perspective, the same thing is true, right? So scope two is a really important part of a carbon footprint. Not always the biggest, but it’s one which is always sort of in the control of the business. It’s one of the levers they have an impact over, unlike some things within scope three, like your supply chain, which is much harder to manipulate. So yeah, looking at scope two and being able to see the emissions associated with your electricity consumption allows businesses to see; in terms of how they’re operating, what changes they can make. So linked to the benefits of smart meters, if you can see your business is using electricity, you know, at a peak time and you’re doing lots of peak consumption, you’re going to see your carbon footprint’s potentially higher. And normally, your bills will be higher. Whereas if you’re using off-peak, you’ll be able to reduce your emissions and your costs.
Project Perseus allowing us to connect to smart data meters is going to allow businesses to see when those emissions are ramping up and start to control that. Yes, it’s great the emissions are likely to be lower but the big thing for small businesses is they’re going to pay a lot less for their electricity.
Ross: Yeah, that’s really good. It’s really interesting that you brought up that education, guidance piece as well. Because if I think of accounting in the traditional sense, not carbon accounting, I can see how you’ve developed that and then moved into carbon accounting and grown that guidance for businesses, which is really good to see.
Conrad: Yeah, I guess I’ve got a follow up point on that. So if you think about financial services or accountants within a business, often they’re the trusted advisor for all of those things to do with money, cashflow, all that sort of stuff. And, when it comes to carbon accounting and net zero, businesses are going to need the same sort of support. Well, they can either educate people internally to bring them up to speed, or they can go to a carbon accountant. But more and more, there are loads of great carbon accountants. Well, sorry, there are carbon accountants and they’re great, but there’s not loads of them, so there’s not really enough. Well, there’s definitely not enough to go around. So we either need to get way more carbon accountants or we need to educate accountants in carbon accounting so they can be the trusted advisor for the thousands of small businesses they work with. And we’re seeing that trend at Sage, we see increasingly, numbers of accounting firms who were traditional accounting firms a few years ago, turn and either focus on carbon accounting as their big sort of differentiator in market, or they add it as a subsidiary service, which is giving them a new revenue stream. And, I don’t know if it’s just the ones we speak to, but all of them are doing really well because there’s so many businesses, small businesses out there who are looking for this support and accountants are doing, you know, a great job at educating themselves on it. Even across a carbon account there’s no one who’s sort of nailed that. It’s not a direct, exact science like accounting is. With accounting, you can count every penny and things can, you know, line up perfectly with the carbon accounting. There’s sort of boundaries in which things can be shifted or you can sort of pull things in and out of scope. And so it’s not a perfect science yet. So just starting or just getting your SMBs on that journey is really the best place to be.
Ross: Yeah, definitely. And like you said, once you know, we start integrating smart meters more, we can get more reliable data for improving that as well.
Conrad: Yeah, I think the benefits from smart meters, there’s kind of two sides to it. I see for SMBs or SMEs the benefit is the smart meter even at that end, there’s loads of benefits for them. Being able to see when you’re using your electricity, using electricity off peak, going from like a fixed meter where you pay, you know, they’re taking that money from you, whatever. There’s the current system and this is how I’ve got at home, admittedly, I’ve not got a smart meter for my sins. But I’ll be billed up front and I’ll be paying for electricity, which I’ve not used for like months and months, and it builds up and I get all this credit. But for a small business, that’s actually cash flow, which could be worked into much better effect within their business. And there’s all these different benefits paying for electricity that you’ve actually used, automating it so you don’t have to report your electricity consumption back to a provider, seeing it in like a smart environment so you can log on and it’s just there rather than thinking about your smart meter every, few months and you forget about it. So there’s loads of benefits from a small and micro sized business perspective on smart meters. And then there’s a sort of subsidiary benefit which is a better understanding of your carbon footprint. And again, why do you need to know your carbon footprint? There’s obviously great benefits from a sustainability perspective, but businesses need this information for a whole host of other reasons, even small businesses. So if they’re looking to do business with central government or the NHS, you need a carbon reduction plan, PPN 0621, if you’re working with a big supplier, say for example, you work with Sage or you work with Sainsbury’s or whatever, suppliers are going to be asking for carbon footprint data to feed into their emissions reporting.
But you’ve also got banks. Increasingly, banks are going to their small businesses and asking them for carbon data including scope two electricity consumption, and offering them loans based on their net zero trajectory. So if you’re a small business that has completed a carbon footprint and has got a net zero plan, you’re a much lower risk than the exact same business within your sector who hasn’t started that journey. Because there’s a lot of risk associated with your activity. And the fact that you’ve not even started looking at that is a bit of a red flag to banks. So if they can start working with small businesses who are clued up on all of this stuff, even if they’re in a riskier sector, there’s more likely that business will come through and actually become profitable, will remain profitable. So yeah, a whole host of benefits.
Ross: Yeah, definitely. And I think I’m just thinking there, obviously I can see if we sort of move into Perseus here a bit. It was always very clear to me the benefits for small businesses because you can access green financing. And then for banks, you know, they’ve kind, if you use that carrot stick thing, they’ve got regulation behind them where they’re having to report on this. But then for carbon accounting firms where do you see the benefit of this work more generally and Perseus?
Conrad: There’s a whole bunch of benefits for carbon accountants and carbon accounting software providers. For me, probably one of the biggest things is granularity and accuracy. And with that comes trust and traceability and just general confidence around carbon accounting. So our current methodology, we’d typically or one of the methodologies we would use, would be understanding what someone spends on their electricity consumption, and we could read this from their accounts really quickly. But with that, that might be, you know, a month’s worth of energy usage of which we don’t know whether they’ve used that in peak or off peak or when it was a particularly windy day and there was lots of renewables in the grid, or if it was sort of peak times during EastEnders and there was no wind, or when there was no wind and the sun was shining and it was like natural gas was 70% of the grid. So we can’t see that within our system. So any estimate on carbon footprint is exactly that, an estimate, and that sort of over a year or average out. And it won’t actually be too far from the truth. But month by month, it could be sort of wildly or wildly inaccurate. But moving to a smart meter data reading and going from monthly data to Half hourly data just reduces that error risk within that calculation.
So that’s one thing. It improves the number the user sees. But also with that old methodology, if a business makes a change to their carbon footprint or their consumption, the only way you really recognise that is from reduction in cost. And that would come from moving to an off peak piece. But actually with the 30 minute reading, you would be able to see the direct changes more clearly. So if someone had moved all of their charging to overnight or at different times, but perhaps the price hadn’t changed, we’d still be able to see the benefit from a carbon reduction perspective, and all of that would be tracked within the system. So it just gives, it’s like that positive feedback loop so a business can make changes to their operations. And with this Perseus model, they’ll be able to see those changes within their carbon footprint the next day because the information would be there. Versus waiting a month and not really knowing if you’ve made a difference, you have made a difference, but it’s not actually recorded because of the existing methodology.
Ross: Yeah, that’s really interesting getting that kind of instant behavioural change. But for whole businesses. Sort of going off on a tangent a little bit, you know, there’s a big push now from smart data from governments and there’s more recognition now of this kind of work. Are you seeing that, you know, influence with the banks you work with or the businesses, whether there’s more willingness to open up to, you know, open data, smart data, and these kind of areas of work?
Conrad: I think because it’s such a, it’s like a topic which touches society at large. It’s such a big trend. I definitely think the adoption of these technologies is just happening across the board. But I think that’s just as the general public gets on board with this sort of technology in their lives. I think that’s where the biggest shift is, because I think you can see trends within enterprise businesses adopting different technology. But that’s only the sort of very few people who sort of operate in that sort of business landscape. But for something like smart meter adoption and amongst micro and SMEs. That’s really just a reflection of society much more broadly. And there’s so many, you know, when you talk, think about micro micro-businesses and small businesses. There’s literally millions of them. So it’s just like, is the general public seeing this adoption of technology? And it’s generally. Yes. So that’s what the trend is. There’s not like a quick shift like you’d see in a sort of enterprise where you only only see like a few thousand people need to be convinced it’s the right thing to do. And those people are looking out for things which they can do to adopt. This is millions of people who have got millions of other things to worry about. So the behaviour change is a lot slower, but it’s really positive, I’d say.
Ross: Yeah. Those are most of my questions. But is there anything more, you know, on Perseus, on the pilot specifically that you wanted to talk about? Basically, how it’s going.
Conrad: Yeah. So I guess I’ve been involved with Perseus for a couple of years. Since it’s sort of ideation, really. And I’ve always been impressed at how well it’s run, from an organisation point of view. Yeah, the organisation, the structure, the sort of this is what we’re going to achieve in year one. And this is the sort of process in which we’re going to do it, and this is how we’re going to engage with the stakeholders who are on board and the sort of the working group structure, all of that sort of stuff, I’ve been really impressed with. I’ve been involved with other sort of similar projects which launch with the same amount of excitement, but the momentum isn’t kept. And that’s not because people aren’t excited by it, but it’s because it’s not run properly and the expectations aren’t set and the operational structure isn’t in place for it to work well. And I think Project Perseus does have that super you know, the organisational structure, the AGMs, the updates, the email updates, the different working groups, all work to keep people, to keep the many stakeholders on board so people know what’s going on. So yeah, I’d say that’s one of the best parts of it, is essential what keeps it going.