The Perseus pilot – in which banks 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 means for their business, their customers, and the broader net-zero transition.

In this episode, we sat down with Zarina Banu from Tide, who outlines the company’s role as a digital CFO and business management platform supporting SMEs across the UK, India, and Germany. The conversation reinforced just how vital SMEs are to national and global sustainability targets and why they need continued support to succeed.

Zarina highlights how Perseus is ‘ahead of its time’, noting its potential impact and ability to decode sustainability and net zero practices for SMEs. She also spoke to the importance of cutting through the noise—reminding us that while business priorities may shift, the urgency of tackling climate change remains unchanged.

Timestamps:

00:00 – Introduction to Tide and Zarina’s role

01:00 – Key financial and sustainability challenges for SMEs: Discussion on how energy efficiency and cost-cutting are closely tied to emissions reduction and financial stability.

01:35 – Current product offerings and net zero plans: Zarina explains Tide’s current carbon insights product and outlines ambitions to deepen their net zero solutions for SMEs.

03:00 – The challenge of decoding information for SMEs: Insights on how the abundance of sustainability information causes friction, and the role communications and partnerships play in helping SMEs.

04:15 – Introduction to Perseus and Tide’s involvement: Zarina discusses how Tide got involved with Perseus through B4NZ and why it aligns with their SME-focused mission.

06:15 – Value points of Perseus & the pilot: Positioning SMEs as critical stakeholders, and the expected impact of the pilot program.

08:40 –Potential hurdles: staying committed to net zero and silencing the noise: Emphasis on staying committed to the climate mission despite distractions, and how Tide is doubling down on net zero with a dedicated lead.

10:55 – Integration of Perseus into Tide’s platform: Exploration of how Perseus might fit into Tide’s offerings depending on pilot outcomes and scalability.

11:45 – Uniqueness of Perseus in the market: Zarina reflects on how Perseus stands out due to its reach, potential impact, and early-adopter hurdles.

13:05 – Final thoughts on business case advocacy: A call to keep making the business case for Perseus repeatedly to keep it front of mind for decision-makers.

Transcript: 

Ross: So yeah, I think, can we just start really by you giving a brief overview of Tide and your and your role at tide?

Zarina: Yeah, sure. So Tide is a business management platform. We’re live in the UK, India and Germany, and we’re on a very proactive international expansion plan. We currently have over 1 million members. Those are customers in those three markets. And what we do is, we are their CFO. So we manage and receive payments. We manage business expenses in the app, create invoices. We do accounting. And this is all served by a number of services. So small businesses are very time poor. So tide acts as their fundamentally their finance function. And we are expanding into business management as well very actively.

Ross: Yeah, that’s great to hear. So the small businesses there, what do you see? You know, is their main challenge when it comes to their targets for sustainability and, you know, broader challenges, financially.

Zarina: Essentially, the reduction of emissions goes hand in hand with energy efficiency. So cutting waste, optimizing supply chains and lowering electricity and fuel costs, many of tides business owners are energy dependent. So that’s very key for them. And in the long run, of course, sustainability efforts can drive financial savings. So there’s a huge upside there.

Ross: Yeah that’s great. And with that knowledge what kind of products do you offer SMEs?

Zarina: At present we offer only carbon insights. But you know we’re very much in sort of deep dive mode at the moment. So what we’re doing is we’re looking at net zero for members. Tide is a net zero business itself via carbon removals. And as this year rolls out, we are looking at a much deeper product offering for our members because we do know that, you know, net zero. For example, in the UK it’s written into law that the UK is going to get to net zero by 2050 and there is no path to net zero in the UK and dare I say it, in other markets that Tide exists in, without this path to net zero cannot exist without SMEs. So the path to net zero is entirely dependent on the success of SMEs to get to this themselves. I think one of the challenges for SMEs is to really to decode this huge amount of information out there. For example, this is causing friction for SMEs. So we know from our insights, we know from our data that SMEs want to get to net zero. And they really do want to do this. The motivation is there, the desire is there, but this huge amount of information and how to decode it for them is currently a huge friction point for them. So I think one of the solutions, well, from a comms point of view is, you know, what are the steps it takes to get SMEs on the path to net zero? So people on my side of the fence in the comms industry, we can offer practical tips, advice, insights, one stop shops for SMEs to get to net zero, which is of course, you know, updated all the time because it’s an ever changing landscape, you know, which throws up different challenges all the time. And fundamentally, SMEs are very, very time poor. They’re busy. They’re focused on running their business. So, you know, let’s not forget that many of them are in sort of survival mode, or those that are in growth mode are still super, super busy. And so sustainability for them is a sort of an add on that they just don’t have the brain space all the time to, look into deeply. And so this is where Perseus can come in and where Tide, you know. And partnerships like this can play a key role in simplifying the journey for SMEs. 

Ross: That’s great. I’m glad you brought Perseus there. So I dont need to segue myself. 

Zarina: I’d be a bad PR person if I didn’t. Right?

Ross: Yeah. Can you talk about mainly how you started to get involved with Perseus? I know you’ve been on board for a while.

Zarina: So this goes back a couple of years when we were involved with Bankers for net zero, which is now B4NZ, and Perseus is obviously an offshoot of B4NZ, and, you know, it is entirely aligned with our business. Tide is entirely focused on small businesses. We serve small businesses with no finance function and about 0 to 9 employees. So we’re entirely aligned and fundamentally on the same mission right here to support SMEs to get to net zero. So from about two years ago we got involved with the Icebreaker team. They presented the proposition, it was very, very exciting. And, you know, if Perseus can scale this nationally, you know, who knows where this can go. And certainly I think the potential is huge. And also to get it on the map at the top table because currently the net zero and SME sort of alignment is not really being discussed at the top table of government. So I think it’s really important that you know, we jointly keep pushing this in front of the right stakeholders, both on the business side, you know, amongst Perseus’s various members and also at the governmental side, you know, this is kind of mission critical.

Ross: Yeah. No, that’s that’s really good that you brought that up the the government’s role because I know, there can be a lot of emphasis on bigger businesses, and I wonder whether they, not that they ignore it, but they don’t see the impact that smaller businesses can have given that they’re, you know, they make up the larger businesses, supply chains. Yeah, I think can we move mainly into obviously the Perseus pilots coming up, but I wanted to just get your overview on the key, you know, value points of Perseus.

Zarina: Well, I think, you know, number one is the decoding of international best practice and UK best practice. You know, what do SMEs, what do businesses adhere to and really how to decode the noise and make the path simple to net zero. So that’s one thing. The second thing is really to understand that SMEs are part of the solution, and it is how we get them on the journey, how we get external stakeholders on the journey. Business as well as government as well as, you know, public private to understand that, you know, in the UK, for example, SMEs form about 6 million businesses and they employ multiple amounts of people. So really it is really about how to push this conversation front and centre for SMEs and to understand that we need more representatives from this sector early on the discussion points. And then lastly, the impact of the pilot. I think the pilot is going to be a huge milestone for Icebreaker, for Perseus and also for this conversation, because once business fundamentally and SMEs – both time poor, really want to get to the end point very quickly – can see how it’s actually working. And to understand that this is a thing that is going to be real and especially for big business, if you like, internally how to scale this across our customer base. So I think there’s those three points there that I’ve outlined.

Ross: No. I definitely agree. Yeah. It will be a huge milestone. I’ve started to see some of the demos of what the pilot will actually look like. And I think that actually solidifies in your mind that, you know, it’s happening and it’s, you know, going to be quite easy for SMEs and banks to use. Where do you see the main challenges with Perseus coming? As we want to expand, as we want to get in front of people? What are the hurdles, really, that we could think about now and avoid in the future?

Zarina: I think it’s important to remain focused on the long term. You know, climate change is not going anywhere despite the noise out there. And it’s really, really important to focus on that. So you know the UK has got its 2050 target. But the fact is that there is a huge amount of noise distracting, for a lot of people. For others, perhaps it’s an excuse to take a detour. But at present, you know, unless the science proves otherwise, net zero is not going anywhere. I mean, for Tide, we will continue to be a net zero business, we’re working on offering net zero solutions to our small businesses across our markets. And so I think that is the challenge. You know, stay true to the mission. Stay true to the need to reduce climate change. And in amongst all the noise, do what people feel is principled and right.

Every business has its own imperative and its own challenges and its own strategy and its own stakeholder base. But definitely at Tide, you know, we are actually, funnily enough, doubling down on this. We’ve hired a net zero lead who’s come in and is doing a deep dive on net zero, not just for Tide as a business but also for our members, our customer base. So, yes. No, absolutely. For the long term, you know, we’re committed. And there’s no change there. What it will look like might be slightly different. But, yes you know, we’re a  committed business. And I think it’s really important to understand as well, as a finishing point, that many other businesses remain committed to net zero. It’s just if you look at it from a PR perspective, the news that creates the noise is the news that’s likely to be picked up. So those people who are just getting on and just getting on with the business aren’t likely to make the headlines.

Ross: I was thinking there, once the pilot is operational and we move forward. Will Perseus make up, you know, part of what you offer SMEs like on your site, they’ll be able to go to the site and use Perseus as a tool. I was going to ask how it fits in with Tide’s offerings?

Zarina: I think that’s a great question. It’s definitely something that we can bring back into the business and really at the moment, and I think what we’ve done really well with Perseus, Tide as a business, is to continue to keep the conversation open and to really fundamentally, we are here for our members and we’re here to make life easier for them. And, you know, if the Perseus pilot and the impact of that is going to be able to be scalable even if we start small, then that’s definitely something that Tide would certainly be interested in having a conversation. And, you know, Perseus is best placed to do this at at present. I can’t see anyone else doing it, so we absolutely have to keep the conversation open.

Ross: Yeah. No. Amazing. Are you part of any of the projects like Perseus or is it quite unique?

Zarina: I actually don’t know what’s out there, to be honest Ross, call me ignorant, but I can’t see anything else out there that has the reach, the scalability and the involvement from the right people. Personally, I think it’s way ahead of its time, which is potentially sometimes what’s the challenge with adoption of both of the membership and potentially of the pilot? Because it is way ahead of its time, people are potentially finding it a challenge to understand its potential impact right? So its early adopter phase, people don’t quite know what it is. They don’t know how it’s going to affect them. They don’t know how it’s going to drive up or drive up in the right places and drive down in the right places, revenue, both on the business side and on the member side.So, you know, I think it’s genuinely a trailblazing product.

Ross: Yeah, that’s great to hear. That’s actually that’s actually most of my questions. But if you wanted to there’s anything more you wanted to add then feel free. 

Zarina: I think I’ve said this before. I think it’s really important that, you know, the business case is made continually and strongly. Just because the business case was made, say, 18 months ago, doesn’t mean that it shouldn’t be made again repetitively. So at the end of the day, people who are making the decisions on the membership side are very, very busy executives. So I think it’s always of value to continue to put that forward, to make the case, to provide clarity and to always, always demonstrate the business case.

Ross: Yeah, absolutely. That’s hopefully where work like this comes in as well.

Zarina: Yeah, absolutely. If you don’t put it down, how are people going to know about it?

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.

The upcoming 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 the real and financial economy.

In the lead up to the pilot, 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 businesses, their customers, and the broader net-zero transition.

In this conversation, Ian O’Donnell MBE from the Federation of Small Businesses (FSB) talks about being a voice for the small business community, sharing insights on how to empower SMEs to report their carbon emissions effectively. With SMEs accounting for 99% of UK businesses and nearly 50% of business emissions, they face significant barriers to carbon reporting, including limited resources, restricted access to energy data, and complex landlord-tenant relationships. The FSB continues to advocate for stronger government support, standardised carbon accounting, and financial incentives to ensure SMEs can play a vital role in the UK’s transition to net zero.

Timestamps

[00:00] Introduction: Ian O’Donnell, Federation of Small Businesses (FSB)
[00:40] Defining the small business community: The importance of representing micro-businesses
[01:40] SME challenges: Reporting carbon emissions, resources, and limitations due to tenancy arrangements
[03:17] SMEs represent around 50% of UK business emissions; importance of government support
[04:33] Value of Project Perseus for FSB: Simplifying SME emissions reporting, particularly scope 1 and scope 2 emissions
[05:55] Working through challenges of data accessibility with Perseus
[06:40] Simplifying carbon accounting by connecting SMEs with existing tools
[08:35] Main barriers for SMEs engaging with Perseus and opportunities to improve uptake
[10:00] Future of Perseus & Future use cases: Water, electricity and gas.
[10:35] UK Governments role: Need for targeted SME education and tailored support. Differentiating big / small business
[12:40] Landlord-tenant challenge: Impacts SME’s ability to invest in energy improvements
[13:45] Financing complexities: How tenancy duration affects investment decisions for SMEs
[15:00] Geopolitical trends and their impact on SME commitments to sustainability
[16:30] Importance of consistency and stable deadlines for SMEs in sustainability strategies
[17:05] Closing remarks: Simplicity, accurate data, procurement access, and inclusive finance for SMEs

Transcript

Ian: I’m Ian O’Donnell, I’m deputy chair of policy at the Federation of Small Businesses and one of the non-executive directors there. And as an organisation, our role really is to support and help the small business community, both through a range of sort of support tools, including insurance and things like that. But also, crucially, and the key reason for our being is to talk to stakeholders at national and local level, in government and otherwise, about how they can make sure we have the right environment for the small business community for them to thrive.

Ross: Yeah. And I guess, yeah. So the small business community there, what kind of size are we looking at?

Ian: So we, we represent the SME business community. But the majority of our membership and the businesses we engage with are at the micro end of the small business community. So less than ten employees. Though we have a fair few members as well who are sort of in the 10 to 50 employees and a few who are bigger than that. But primarily we’re there to support sort of the smaller end of the SME community. And to really ensure that they get a voice when individually they wouldn’t have a voice. So obviously each of those individual small business owners don’t have the time or the resources in the way that a large business does to speak to government. So we very much act as a collective voice for that small business community.

Ross: Yeah. No. Really cool. I guess moving in into the net zero space then I guess there’s a, thinking about what you just said there, it’s like, do they have the education? Do they have the power to, you know, track their carbon emissions? You know what’s SMEs plans in that space?

Ian: Yeah. So the challenge here is two-fold. Obviously A. The rules coming down the line in terms of reporting of carbon footprint, carbon calculation. And particularly actually that’s already being felt through the procurement process. Obviously larger businesses have already got to report on scope three. And obviously that inevitably means if they have small businesses in their supply chain, those small businesses are being asked to report on their carbon footprint, even though actually legally as yet, they don’t have to report. And so the supply chain already means that this is coming into effect. And, the problem for many micro and small businesses is they don’t have the knowledge, they don’t have the skills, and they don’t have the access to resources to A. Monitor and measure their carbon footprint. And B. Sometimes don’t have the ability to put changes into practice in order to reduce their carbon footprint, if they’re in shared premises, if they’re in a tenanted building, rather than owning their building, short term leases quite often often means they don’t have the capacity to to make the changes that they want to, for example.

Ross: Yeah, definitely. Yeah, it’s a really good point the, it’s always quite clear when it’s like large corporations what they need to do to stay in line, but the small businesses actually make up the larger businesses supply chain.

Ian: Exactly. And also in terms of the economy as a whole. So it’s why it’s so important that we don’t and the government in particular, doesn’t leave the SME community out of this sort of race to net zero in terms of their support and enablement for that. You know, five over 5 million of businesses in the UK making up over 99% of the business community are SMEs, and over 2 million of those are less than ten employees. So this is a significant proportion of our business community here in the UK. So if we don’t solve the problem for those businesses, we are not going to solve the macro problem of how we get to a net zero carbon neutral economy.

Ross: Yeah. No. Very true. I was reading this SMEs make up around 50% of UK business emissions as well.

Ian: Yes, exactly.

Ross: I guess now it’s good. We’ve, we’ve kind of set the scene now to lead into Perseus. And just where do you see the value of Perseus for FSB and, and your, your SME customer base?

Ian: Yeah. So the real value of this, from our perspective, is if we can automate and simplify the process by which a micro or small business can get the data it needs to report on its carbon footprint, particularly in their scope one and scope two emissions from micro business, because they have less requirement to report on scope three, but certainly their scope one and scope two, they’re having to report up supply chains. It’d be invaluable.

There are challenges to it, and it’s great that you know what Project Perseus has also given that opportunity to discuss some of the challenges around how this happens, because what with many small businesses being in tenanted premises or even in shared premises, they often don’t have direct access to metering and details of their energy consumption. And so I know it’s been really good recently through Project Perseus, to have some of those discussions about how do we still enable those small businesses through other forms of technology, to be able to report in using the project Perseus mechanism, to then allow that data to be transferred.

Ross: Yeah. Yeah. That’s amazing. Really good. Really good to hear that you’re working through those challenges. And I guess you work through the challenges in a collaborative environment as well, so you can hear other people’s pain points.

Ian: Yeah. Exactly that. You know, it’s been great with Project Perseus that you’ve got, you know, a good range of people, from the financial institutions to the those involved in the metering through to representatives like myself, representing the business community. And sort of all looking at the problem in different ways, but all with an overall passion to say, how do we make it as easy as possible for the SME community to be able to get the data it needs to be able to report accurately?

Ross: Yeah. And how do you think, thinking more long term. How do you think Perseus could slot into you know, what you offer SMBs? Could it be part of your offerings, like education, teaching them on sustainability? Could Perseus that slot in there.

Ian: Yeah. So I think for us it’ll be about connecting people up. So you know what carbon calculators are out there. Accountancy packages, all the rest of it. How do we work with those to make sure they’re plugging in data when it’s available through Project Perseus and other things that may become available to simplify for SMEs that process of producing a carbon report.

We’re also involved in organisations like UKAS, which is the UK accreditation service, on how do we make sure that there is a common standard and universality about data reporting, because at the moment, as many, you know, and we’ve discussed again through Project Perseus, is actually you can go to several different tools and get several different answers on what your carbon footprint is. So how do we create some consistency and some certainty about the data, which is obviously vital when it comes to SMEs accessing. Two key things one procurement opportunities and second biggest issue affecting many SMEs – access to finance. And with banks obviously requiring to know what the carbon footprint is. And wanting some assurity of that data. Anything we can do to help create that is vital. But notwithstanding that challenge of making sure that all SMEs have access to the data. Which isn’t necessarily going to come through half hourly metering for all of those SME community.

Ross: What do you think the barriers might be for SMEs engaging with Perseus. We can help with this kind of work we’re doing right now. But how can we improve engagement?

Ian: The reality is SMEs themselves are probably not going to be engaging with Project Perseus directly. They’re going to be engaging with the partners who come on board, who provide that mechanism for that data, to then become available in the tools that SMEs are using. So when we look at accountancy packages; Xero, QuickBooks, Sage, etc. you know, it’s vital that they engage with Project Perseus because then that data flows naturally into those systems and they, you know, just the same way as I can do my balance sheet of my accounts, I can go on there and I can get my carbon report. If we connect all the dots well, through Project Perseus, that’s where SMEs are really going to see a benefit for those that have got access to that data in the current form. And also I think where Project Perseus, as it starts to see that success and that enablement, there’s increasing pressure to say, how do we solve the problem of businesses that don’t have access to half hourly metering? And, you know, I’m sure you know, as a collective we’ll be able to create pressure and, and also create some of the solutions to how that data can be sourced.

Ross: Yeah, definitely. And there’s also the fact that, you know, this is our first use case is electricity. And then it could move into to, a lot of people are saying gas, at the moment. But there’s loads of other ways to go.

Ian: Water is, you know, the three big ones for any micro business, small business is going to be electricity, water, gas. So if we can solve those, those big three and automate that, and then obviously we then move into many other areas in terms of travel and so on. But those are more in scope three. But if we look at scope two, those are the biggest. How can we make that simple and straightforward for the SME community?

Ross: Yeah. Really cool. Yes. I’ve spoken to Sage and I’ve spoken to a few others, but, I think FSB is interesting in the sense that you work with government and policy makers. I wanted to talk about what inkling you get from the government on, you know, on this topic and how important it is tracking SMEs emissions. How important is that for the government?

Ian: I think, you know, overall, this government has continued to be fairly positive on the discussion around how do we reach a low carbon economy. And so continue to have that as a focus, or at least there’s been some consistency for a while now around the importance of reducing carbon footprints for all businesses. Um, I think the challenge, as inevitably government understands big business a bit more readily than it understands small business. And I think the reduction in carbon and the way that a big business can adapt is very different from a small business. And I think one of our key roles has been to sort of have that constructive discussion with the government to sort of say, yeah, that that scheme, that program you’ve got over there works very well if you’re a big business. But actually small businesses are different. And how do you help them and support them in a slightly different way. So. And one of the key areas of that is around education. So it’s great that we’re through Project Perseus creating the tools. But we’ve also got to provide the education and support for that small business to be able to adapt and change and deliver on a carbon reduction plan within their business over the next few years.

And alongside that, also, we’re very much in discussion with government about, well, how do you facilitate that? So I know I keep going on about it, but the sort of the tenanted aspect, small businesses do not generally own their own premises – actually creates not just the challenge of access to data, but it also creates a big challenge in terms of the ability to affect change. If I own my premises and it’s a big premises, it’s no problem to stick solar panels on the roof. It’s no problem to switch over to air source heat pumps. If I don’t own my premises. I don’t necessarily have the access and the ability to make those changes. And also, if I’m perhaps only got a five year tenancy as opposed to a 25 year tenancy that a bigger business might have if it is a tenant, I don’t have the ability to finance that and get return on investment within that relatively short timescale. So how do we again looking to government for support and perhaps creating the frameworks whereby you can have transferable finance around, adaptations to buildings and things like that?

Ross: Yes. Is that a data problem or a legislative problem?

Ian: It’s partly a legislative problem. It’s partly just a you know, the finance industry is not used to the fact that who owns the the asset is quite challenging in that scenario. So if I as the business don’t own the building, but I’m the one who wants to put on the solar panels, but I might be moving out in five years, how does that journey look from a financing perspective? That’s not something that is a traditional financing model that they’re comfortable with. Especially as some of the technologies we’re talking about are emerging technologies. And so again, financiers are also slightly wary of that. So really we’re looking for business to step in and give some assurity to those who are providing finance, to be able to give confidence in the data about carbon reduction that these will provide. How, through Project Perseus, we can get accurate data about the impact it’s having for that business. And how do we solve the problem of, in effect, the landlord tenant split on these things.

Ross: Yeah, fantastic. And just thinking there on, this is again more geopolitical. But you’re talking about big businesses and banks there, and there’s this trend that seems to be coming from across the pond. HSBC, BP now changing its sustainability targets when you’ve got these big businesses changing their net zero plans. Do you think that’s going to have a knock on effect for SMEs, or is it more time to double down on SME emissions?

Ian: It’s really interesting sort of seeing the way different big businesses are responding. So, some are actually responding by saying no, we think this is the right thing to do. We are in, we actually want to locate in the UK because it’s a good place to be from a support and a framework around low carbon. But other businesses, obviously, as we’re seeing perhaps located elsewhere, are reducing their targets. And I think it does create a challenge for SMEs because any business wants certainty, any business wants to know the landscape into which it’s planning. When you’ve got a lack of certainty and moving targets, then it becomes very difficult to plan. Bearing in mind that a small business needs ROI on a much shorter timescale than a large business can afford to have when making investments such as carbon reduction, type investments will tend to be. So yeah, one of the things that’s really vital is that we we have a consistency of approach, and that deadlines and timelines don’t keep moving for SMEs, because otherwise I know from experience, from conversations that we’ve had in the community, is that if the timelines keep moving and keep getting pushed back, the response is, well, actually what I will do is not bother because it might never come anyway.

Ross: Yeah, definitely. And that’s really, really interesting. I don’t know if you wanted to add anything to discuss on Perseus itself or, or even anything coming up for FSB you think might be relevant?

Ian: No, I mean, I think the key things that I think we are affecting the small business community is simplicity and a assurity of data, so that if data is available, that we can know it’s good and that it’s simple and easy to report on. And that we give access to data for the whole small business community. So solving the problem around access to data, if you don’t have half hourly metering available in whatever building you do, bearing in mind, as I was talking to somebody just earlier, you know, working in a garden office in their home, you know, what does that look like from an energy reporting business for a small business, when it’s part of your overall household energy bill? And then making sure that we maintain access to procurement and access to finance for SMEs and don’t exclude them as carbon accounting and the sort of requirement for scope three emissions reporting becomes ever more prevalent. Let’s not exclude small businesses, but let’s use supply chains to help and enable them to make that transition effectively.

In this episode, we speak with Andrew Myers, Lead Architect, Northumbrian Water Group (NWG). Our conversation covers the water sector’s ambitious net-zero goals, flexible energy allocation, NWG’s work with Icebreaker One on the Stream open data project and the evolving public perception of water companies in the media.