How to set a net zero target as a small business
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Customers, tenders and banks increasingly ask: "Do you have a net zero or carbon reduction target?" A target turns a carbon footprint into a plan, and it's one of the clearest signals that you take this seriously.
This guide explains what net zero means, the two routes most small businesses use, and how to set a target that's realistic for you.
The short version
- Net zero means cutting your emissions as far as possible and only balancing out what's left.
- You need a footprint first. Your target is a reduction from a base year.
- Two common routes: the free SME Climate Commitment, or a target validated by the Science Based Targets initiative (SBTi) through its SME route.
What net zero actually means
Net zero means reducing your greenhouse gas emissions as close to zero as you can, then balancing out only the small amount left with permanent removals (such as projects that take carbon out of the air).
Most businesses set two kinds of target: a near-term target (for example, a big cut by 2030) and a long-term net zero target (by 2050 at the latest, which is also the UK's national target).
Step 1: Know your starting point
A target is a reduction from a base year, so you need a footprint for that year first. For most small businesses, start with Scope 1 & 2 from your energy and fuel bills. Here's how to calculate it, or use the free estimator.
Pick a base year you have good data for (usually last year). Then you can track progress against it each year.
Step 2: Choose a route
Route A: the SME Climate Commitment (free)
Through the SME Climate Hub (opens in a new tab) and the UK's Business Climate Hub (opens in a new tab), small businesses can sign the SME Climate Commitment. You pledge to:
- Halve your greenhouse gas emissions before 2030
- Reach net zero before 2050
- Report your progress every year
It's free, quick, and recognised by the UN's Race to Zero campaign. Check the hub for the current eligibility rules before you sign.
Route B: a science-based target through the SBTi SME route
The Science Based Targets initiative (SBTi) (opens in a new tab) checks ("validates") that a company's target is in line with climate science. It has a simpler route for small and medium-sized businesses. In its current guidance:
- To use the SME route, a business generally needs to meet most of the SBTi's size tests (such as fewer than 250 employees, and limits on turnover and total assets) and stay under an emissions limit.
- The near-term target covers Scope 1 and 2. You don't have to set a Scope 3 target, but you do commit to measuring and reducing Scope 3.
- Validation is a paid service.
| SME Climate Commitment | SBTi SME route | |
|---|---|---|
| Cost | Free | Paid validation |
| What you commit to | Halve emissions before 2030, net zero before 2050 | A science-based near-term Scope 1 & 2 target |
| Checked by someone else? | No — it's a public pledge | Yes — the SBTi validates it |
| Good for | Getting started and showing commitment | Customers who specifically ask for a science-based target |
Step 3: Make the target real
- Write it into your [sustainability policy](/guides/write-sustainability-policy-small-business), with the base year and target year.
- List the actions that get you there: a renewable electricity tariff, better heating controls, LED lighting, electric or more efficient vehicles, fewer flights.
- Measure every year using the same method, and compare with your base year.
- Report progress honestly, including years where emissions went up and why.
Granular's carbon tracker saves your footprint year by year and lets you set a target line, so you can see whether you're on track.
Work out your carbon footprint now
Enter a year of energy and fuel figures and get a Scope 1 & 2 estimate in minutes. Save it each year to track your progress.
Open the free carbon estimator →Frequently asked questions
What is a realistic net zero target for a small business?
A common starting point is the SME Climate Commitment: halve emissions before 2030 and reach net zero before 2050. Base it on a footprint for a year you have good data for.
Do small businesses need a science-based target?
Not usually. Some large customers ask suppliers for one. The SBTi has a simpler, paid SME route for that. Otherwise, the free SME Climate Commitment is a recognised way to show commitment.
Can I reach net zero by buying carbon offsets?
Credible net zero targets focus on cutting your own emissions first. Offsets or removals should only balance out the small amount that's genuinely left.
Found this useful? Pass it on to someone who's been asked the same question.
Official sources
- SME Climate Hub (opens in a new tab)
- UK Business Climate Hub (opens in a new tab)
- Science Based Targets initiative (SBTi) (opens in a new tab)
- SBTi — FAQs (opens in a new tab)
This guide is educational and not legal advice. Thresholds are simplified and rules change, so always confirm with the official source or an adviser.
Keep reading
- E3 min readHow to calculate your small business's carbon footprint from your billsTurn a year of energy and fuel bills into a Scope 1 & 2 carbon figure, with a worked example.
- E3 min readCarbon Reduction Plans for public sector contracts (PPN 006) explainedWhen UK government tenders need a Carbon Reduction Plan, what goes in it, and how to write one.
- E3 min readScope 1, 2 and 3 emissions explained (with small business examples)The three "scopes" of carbon emissions, with everyday examples from offices, shops, cafés and trades.