*4.3. Conceptual Framework for SME Net Zero Implementation Activities*

The academic literature reviewed discussed the drivers and barriers to achieving net zero activities within SMEs. The academic literature reviewed has thoroughly investigated 'why' SMEs should be involved in NetZero implementation, and 'what' SMEs will need to overcome to achieve success in being carbon free. However, the academic literature has not incorporated the grey literature in providing a comprehensive guide on 'how' SMEs can achieve net zero. We reviewed the academic and grey literature on this topic and identified four frameworks that have been proposed for net zero implementation in the grey literature that should be incorporated into the academic literature. The key stages involved in these grey literature frameworks are provided in Table 3.

**Table 3.** Key frameworks for the implementation of net zero strategies in the grey literature (Source: Authors' analysis).


#### **5. Discussion and Development of Net Zero Implementation Framework**

The analysis of the limited academic literature and grey literature on net zero implementation identified the drivers for SMEs to embark on this journey. The drivers as discussed previously in the paper focused on aspects of cost reduction through green energy procurement, the market demand for zero emissions, brand image, and the requirement to meet government regulations around net zero. Although the analysis identified that it will be beneficial for SMEs to implement net zero capability, the papers have also identified challenges that impede this capability. The challenges identified through the literature analysis have focused on the reduction of short-term profits when implementing sustainable practices, lack of support from the supply chain and government for implementation, and lack of training. An important aspect to consider for SMEs is their position in the supply/value chain and the influence of the consumer/customer to overcome the challenges. The position of the SME in the value chain and the position of power will also determine whether the SME can access funding, support, and skills training.

Although several frameworks have been proposed in the grey literature, this paper is unique because it proposes an implementation framework for SMEs to implement their net zero strategies based on the academic and grey literature. Based on our analysis of the key stages in the existing frameworks as shown in Table 3, we propose that some crucial elements from the academic and grey literature on SMEs and net zero activities can be incorporated into a holistic conceptual framework to help SMEs attain net zero and present these elements and the framework in Figure 2.

Figure 2 depicts the conceptual framework for SMEs to achieve net zero capability. It provides a clear pathway for SMEs to embark on their net zero journeys and acts as a progressive decision-making framework as well as a continuous improvement framework. The framework comprises eight stages: (1) Understanding the position of the SME in the value chain; (2) Understanding the pressures from stakeholders; (3) Undertaking greenhouse gas accounting to measure current levels of carbon emissions; (4) Undertaking internal changes towards the net zero agenda; (5) Undertaking external facing changes towards the net zero agenda; (6) Uncoupling, Reduction and Substitution; (7) Us over Me; and (8) Updating regularly. Next, we explain each of these stages.

**Figure 2.** Framework for SMEs to achieve net zero capability (Source: Authors' analysis).

*Stage 1: Understand the position of the SME in the value chain*. The position in the value chain determines the level of engagement with the focal firm in the value chain that sets the performance targets for other entities in the chain [10,27]. This is essential because the activities and decisions of other entities within the value chain could affect the SME. The position of the SME in the value chain also determines the baseline business and operating model for the SME and the various strategies that it can engage in. For example, an SME that is high in the value chain will have more flexibility to adopt net zero activities and such an SME could more readily influence other entities. Conversely, if the SME occupies a low position in the value chain and can only stay profitable by engaging with firms higher up the value chain that are substantial carbon emitters, it will be hard to engage meaningfully with the net zero agenda [27,75].

*Stage 2: Understand pressures from stakeholders*. The position of the SME in the value chain not only sets the proximity of the SME to the focal firm, but also the proximity to the customer and other stakeholders. These stakeholders exert different types and levels of pressure on the SME and the SME needs to be aware of it. The typical transaction relationships (business to business or business to consumer) in which the firm typically engages must also be understood. If consumers are not sensitive to increases in price due to engagement in net zero practices, this can be a driver for the SME to engage in such practices [30,31].

*Stage 3: Undertake greenhouse gas accounting to measure current levels of carbon emissions*. SMEs need to create or invest in platforms that can monitor their GHG emissions and inform them about their emission levels [2,10,27,42]. This is a shared thread that runs across all of the grey literature. The importance of this has also been reported in the academic literature [33,55]. This can help SMEs to set targets that they can use to benchmark their carbon reduction efforts. SMEs at this stage can also start to decide on short-term outcomes that will be a step towards longer-term net zero capabilities. By engaging in this process, SMEs could also identify what activities they engage in that contribute most to GHG emissions.

*Stage 4: Undertake internal changes towards the net zero agenda*. After the previous stages have been achieved, SMEs can engage in changes within their businesses to reduce their GHG emissions. These do not have to be large changes. Little steps such as engaging in the training of employees so they are more conscious of the carbon footprint of the business, conducting energy-intensive activities at certain hours, and using more information communication devices to reduce travel and the need for paper can help [2,27,33]. It is easier to make changes within the organisation before trying to make changes outside the organisation, the issue we turn to next.

*Stage 5: Undertake external facing changes towards the net zero agenda*. Altering how SMEs engage with the external environment is an essential requirement for SMEs if the net zero target is to be reached by 2045 or 2050 in the case of some countries [10,42]. This however will depend on the previous stages; for example, pressures from value and supply chain entities as well as the financial health of the SME could impact the SMEs' ability to procure energy from renewable sources because these could be more expensive [2,27]. Thus, activities at this stage will largely depend on Stage 1 and Stage 2 evaluations. At this stage, the scope of decisions will also be heavily influenced by the barriers and drivers to implementing net zero activities that we have shown in Table 2 [30,31].

*Stage 6: Uncouple, Reduce and Substitute*. Some SMEs might need to disengage from certain activities or even leave some markets altogether to help achieve net zero [27,42]. The literature is clear that to achieve net zero, certain practices will need to be eliminated, others reduced, and others substituted with cleaner technologies [2,10,42,60]. These can easily be identified from Stage 3. It must be noted that there could be unavoidable residual emissions that can only be offset via greenhouse gas removal (GGR) offsets from either nature-based projects such as reforestation and soil management, or through engineered methods including carbon capture and storage [2,42]. Offsetting can be used to make an organisation or product carbon neutral, where the sum of greenhouse gas emissions produced is compensated for by carbon offsets, also called carbon credits [2,6].

*Stage 7: Us over Me*. SMEs can drive external improvements through collaboration and help to build communities of climate-conscious SMEs [27,57]. Such communities have the potential to magnify the activities of individual SMEs and the combined efforts of such communities will be more effective at contributing to the net zero agenda. SMEs could also seek valuable partnerships and embed themselves in supply and value chains that are more environmentally friendly or seek to contribute to the greater climate good. There are many ways in which SMEs can help themselves and each other through vital collaboration in building not just sustainable companies, but sustainable supply chains and business communities [10,28].

*Stage 8: Update regularly*. Continuous improvement and innovation processes will be required to achieve the net zero agenda. SMEs will need to consistently be on the lookout for cleaner and more efficient technologies and practices. They will also need to find out ways to embed such technologies and practices into their business activities. However, engaging in communities and with stakeholders that are concerned with the net zero agenda (as discussed in Stage 7) can help in this regard.

SMEs start from Stage 1 and progressively make decisions until they reach Stage 8. If they have not achieved net zero at this point, they can return to Stage 1 and continuously improve their performance. This process should be repeated as many times as possible until net zero is eventually attained by the SME. Continuous improvement can also be implemented until the SME is carbon negative. This occurs when an entity reduces its carbon footprint to less than neutral so that the entity has a net effect of removing carbon dioxide from the atmosphere rather than adding it. Based on the discussion so far, we have inferred a model which we summarized in Figure 2 to emphasize several dimensions. The combined framework from the academic and grey literature indicates that for SMEs to effectively contribute to the net zero agenda, a holistic and long-term approach that incorporates the eight stages we have identified should be encouraged. It also suggests that SMEs should engage in progressive decision making as well as continuous improvement using our framework to actualise net zero.

#### **6. Conclusions**

The journey to net zero is urgent, but complex, and there are both challenges and huge opportunities for SMEs [10]. SMEs collectively account for a significant proportion of greenhouse gas emissions and so there is a need for urgent action to be taken by SMEs in the journey to achieve net zero. Lip service must not be paid in this context, but action needs to be taken. All hands must be actively on deck because, for example, research shows that Vietnamese listed firms have been found to engage in "green talks" in their corporate reporting rather than "green actions" in their daily practices [76]. The framework we have derived from the academic and grey literature is a helpful tool for SMEs as they plan and undertake activities to contribute to the net zero agenda.

Like all other research, this paper has some limitations, yet it provides vital opportunities for future research. First, like other studies that derive conceptual frameworks from the existing literature, we might have missed some useful literature. However, our incorporation of the grey literature takes into consideration the latest industry perspectives concerning our research questions. Future studies can aim to incorporate the literature we might have missed into our model. Secondly, most of the literature we have reviewed is from the context of the UK and so our framework should be applied with caution in different contexts. However, we were careful to try to incorporate as much of the literature as possible and not only the literature from the UK. The paper has also identified specific variables such as the position of the SME in the value chain, the power position, and the pursuance of net zero capability within short- and long-term timescales. There is therefore scope for the various aspects in this scope to be tested empirically in the future to ascertain the relationship between the variables examined as SMEs generate net zero capability.

A key theme across the entire academic and grey literature we have reviewed is the need for SMEs to understand their carbon footprint, otherwise known as greenhouse gas (GHG) accounting, and then seek to reduce it via several methods. SMEs need to actively engage in activities in the framework we have elucidated to limit global warming to 1.5 ◦C. Furthermore, achieving net zero implies that value chain emissions across the entire supply chain be reduced. When this has been done, any remaining emissions that remain uneliminated could be offset via greenhouse gas removal (GGR) offsets. To strengthen SMEs' role as change agents for net zero, policymakers should reconsider this framework we have developed and ensure flexible and targeted incentives to support SMEs. SMEs should also be helped in the acquisition of green assets, knowledge and skills, which they can in turn share with their customers and communities.

From a scientific perspective, the novelty of our study is the use of academic and grey literature. Previous literature on SMEs and net zero have focussed on the academic perspective and have employed empirical measures taken to justify such perspectives. By introducing the grey literature, this paper explicates the academic and grey literature dimensions of SMEs and net zero to synergise multiple actors and develop a conceptual framework to contribute to the net zero agenda.

**Author Contributions:** Conceptualization, T.O. and S.D.; methodology, T.O. and S.D.; formal analysis, T.O. and A.J.; investigation, T.O., S.D. and A.J.; resources, T.O., S.D. and A.J.; data curation, T.O.; writing—original draft, T.O., S.D. and A.J.; writing—review & editing, T.O.; supervision, T.O. and S.D.; funding acquisition, T.O., S.D. and A.J. All authors have contributed to this research. All authors have read and agreed to the published version of the manuscript.

**Funding:** All the authors declare that they have received funding from Midlands Innovation—Inclusive Transformation funding.

**Institutional Review Board Statement:** This article does not contain any studies with human participants or animals performed by any of the authors.

**Data Availability Statement:** No new data were created or analyzed in this study. Data sharing is not applicable to this article.

**Conflicts of Interest:** The authors declare no conflict of interest.
