Small manufacturers forced to answer 300 questions on net zero
Small manufacturers are being forced to fill out 300-question spreadsheets on their eco-credentials as part of a net zero drive by big business.
Some companies have had to take on new staff to complete paperwork being sent to them because of this new burden, while others are being asked to sign up to strict audits that ensure they follow green guidelines.
The demands are being driven by regulatory changes expected to come in next year which require large businesses to measure and disclose their “scope 3” carbon emissions, a definition that includes indirect as well as direct pollution caused by an organisation.
In many cases, sustainability advisors are being hired by multinationals to collect information from suppliers and are sending each one a long questionnaire to fill out.
It comes on top of already-onerous paperwork related to western sanctions on Russia and post-Brexit checks.
Cambridge-based Goodfellow, which employs around 100 people, said it now had six full-time staff to handle compliance issues such as green regulations, sanctions and Brexit issues.
Simon Kenney, chief executive of the advanced materials producer, said the lack of a widely-adopted standard on net zero rules for supply chains had created a void that a rash of environmental, social and governance (ESG) consultants were seeking to fill.
He added: “We heard the other day from an accreditation company that effectively registers companies as being ESG-compliant, which was working with one of our customers.
“As a result, we got a spreadsheet to fill in with 342 lines of things that they wanted to know. Considering we have 6,000 customers, if every customer sends us that it will be unworkable.
“It is just crazy. And of course, particularly for small businesses, it is going to impact productivity.”
He suggested that the Government should step in to make clear what the minimum reasonable expectations of small firms should be to ensure they were not simply being passed pointless extra work.
Several small manufacturers also said they had been asked to meet new environmental audit standards by their customers, such as the ISO 14001 regime, as a condition of securing contracts.
The audit regimes typically require companies to pay thousands of pounds in fees and submit to annual checks – as well as paying for extra audits if they fall short.
Rowan Crozier, chief executive of Birmingham-based metal stamping company Brandauer, said he applauded the aims of green standards but they had been resource-intensive to adjust to.
He said: “It has definitely been worth it, but it was a real struggle and a big drag on the business initially.
“Thank the lord we did it though, because we are now seeing far fewer issues with new and existing customers – which I’m sure is not the case for everyone.”
It comes after a separate survey by industry body MakeUK found that more than three quarters of small and medium-sized firms are now facing demands from customers to meet ESG requirements.
The vast majority of manufacturers have 200 employees or fewer, with less than half of those surveyed believing they had resources to cope with the extra requirements placed on them.
Faye Skelton, head of policy at Make UK, warned that those who fail to meet ESG targets are at risk of being shut out of supply chains.
The Government said on Friday that it was reviewing red tape as part of efforts to reduce the burden on small businesses.
A spokesman for the Department for Business and Trade said: “This government is taking action against burdensome red tape with our smarter regulation programme, seizing the benefits of Brexit.
“As part of this we want larger companies and investors to understand the impact of additional red tape and encourage them to reduce the number of requests for information they make to small businesses.”
The spokesman added that a consultation on smarter regulation closed in August and that ministers were now considering reform options.
