Green finance strategy · first published 1 July 2019
This is the UK government's updated Green Finance Strategy (2023), building on the original 2019 version. It sets out how the government intends to direct private and public capital into green industries, infrastructure and technologies needed to reach net zero by 2050 and meet nature targets. For small businesses, the most relevant elements are: access to funding bodies (British Business Bank, Innovate UK, UK Infrastructure Bank), new tax reliefs (full expensing and enhanced R&D relief for loss-making R&D-intensive SMEs), the development of voluntary carbon and nature markets, and planned investment roadmaps by sector. This is primarily a financial-system and regulatory strategy aimed at large financial institutions, but it signals the direction of public spending and market development that will shape which green sectors attract investment and contracts. It does not directly change procurement rules, but it confirms the government's commitment to growing green industries where SMEs can position themselves as suppliers.
WHO THIS APPLIES TO
THE ENKII VIEW
For SMEs already operating in clean tech, renewables, energy efficiency, nature recovery or green professional services, this strategy signals sustained and growing public and private investment flows into exactly those sectors — making now the right time to build capability and credentials. The explicit inclusion of an increased R&D tax relief rate for loss-making R&D-intensive SMEs, and the British Business Bank's track record of equity investment into clean tech, are the most immediately actionable hooks for small firms. New voluntary carbon and nature markets, plus sector-specific investment roadmaps due throughout 2023-2024, will create new commercial opportunities that early-mover SMEs can shape and serve.
1. Check eligibility for Innovate UK grants and British Business Bank equity programmes — both have active mandates to fund net zero and clean technology companies, backed by billions in committed capital.
SMEs in clean tech, renewables, energy efficiency or nature recovery — Innovate UK supported 5,940 companies with £1.9 billion in net zero grants (2015-2020) and BBB supported £505 million of clean tech equity investment to August 2022 — these programmes are ongoing and expanding.
2. Review your R&D tax relief claim with an accountant familiar with the enhanced SME R&D Expenditure Credit rate that applies from April 2023 — you may be entitled to a higher relief rate than before.
Loss-making SMEs that spend heavily on R&D in green or clean tech — The strategy confirms 'an increased rate of relief for loss-making R&D intensive SMEs' from April 2023.
3. Bring forward planned capital investment in qualifying equipment before 31 March 2026 to take advantage of full expensing (100% first-year capital allowance).
All SMEs investing in equipment or plant — The strategy confirms 'full expensing from 1 April 2023 to 31 March 2026' under the joint most generous capital allowance regime in the OECD.
4. Monitor the Nature Markets Framework (published April 2023) and the Big Nature Impact Fund — these create new revenue streams for businesses that can deliver nature projects, backed by £30 million government seed capital.
SMEs in nature recovery, land management or natural capital sectors in England — The government is investing £30 million into the BNIF to 'leverage private sector investment in a range of nature projects in England' and has published a Nature Markets Framework setting out investment standards.
5. Watch for the sector-by-sector net zero investment roadmaps due throughout 2023 and the nature-positive investment roadmap due by 2024 — use them to identify which sectors government is signalling as investment priorities and align your proposition accordingly.
SMEs targeting public sector or large corporate supply chains — The strategy commits to publishing roadmaps that 'articulate investment needs by sector alongside summarising the relevant government policy and funding to make the sector investable.'
6. Explore UK Export Finance (UKEF) support — its capacity has just been increased to £60 billion, with a specific commitment to grow support for clean growth and climate adaptation exporters.
SMEs exporting or planning to export green goods and services — The strategy announces an increase in UKEF capacity 'from £50 billion to £60 billion to support UK exporters and supply chains' with commitment to 'increasing its support in clean growth and climate adaptation.'
7. Apply to Invest NI for a fully funded energy and resource efficiency audit and, if eligible, a capital grant of up to £50,000 toward resource-efficient equipment.
Northern Ireland SMEs with annual energy/resource spend over £30,000 — Invest NI provides 'fully funded technical audits, feasibility studies, and advice' to NI businesses spending over £30,000 on energy/resources, plus grants of up to £50,000 for resource-efficient equipment.
8. Investigate the Development Bank of Wales Green Business Loan Scheme for accessible finance to cut energy costs and carbon output.
Welsh SMEs seeking to reduce carbon emissions — The strategy confirms the launch of the 'Green Business Loan Scheme providing Welsh businesses with a package of support to help them reduce carbon emissions and save on future energy bills.'
9. Follow the government's forthcoming consultation on voluntary carbon markets — early engagement will help you understand the integrity standards you'll need to meet and get ahead of competitors in this emerging market.
SMEs considering entering voluntary carbon or nature markets — Government will 'consult on the specific steps and interventions needed to support the growth of high integrity voluntary markets' to position the UK as 'a global hub for voluntary carbon trading.'
10. Start building a basic record of your environmental activities and carbon footprint now — even though taxonomy reporting will be voluntary for at least 2 years post-finalisation, large buyers and investors in your supply chain will face these requirements sooner and will ask suppliers to provide data.
SMEs bidding for contracts in sectors likely to face Green Taxonomy or transition plan disclosure requirements — The UK Green Taxonomy consultation is planned for Autumn 2023, with voluntary reporting for 'at least 2 reporting years' before mandatory disclosure is explored; proportionality is intended for smaller firms, but supply chain pressure will arrive earlier.
Every rule below quotes the official document verbatim.
The UK government estimates an additional £50-60 billion of capital investment per year will be required through the late 2020s and 2030s to deliver UK net zero ambitions. (UK economy-wide investment pipeline; context for SMEs positioning in green supply chains)
“We estimate that to deliver on the UK's net zero ambitions, through the late 2020s and 2030s, an additional £50-60 billion capital investment will be required each year.”
Supplying goods and services for global net zero is estimated to be worth up to £1 trillion to UK businesses to 2030. (UK businesses across all sectors supplying net zero goods and services)
“Supplying the goods and services necessary to reach global net zero ambitions is estimated to be worth up to £1 trillion to UK businesses to 2030.”
Between 2015 and 2020, Innovate UK supported 5,940 companies with £1.9 billion of net zero-related grants. (Companies eligible for Innovate UK funding, including SMEs)
“Between 2015 and 2020 Innovate UK supported 5,940 companies with £1.9 billion of net zero related grants.”
The British Business Bank (BBB) supported £505 million of equity investment in clean technology companies between 2014 and end of August 2022. (Smaller businesses seeking equity finance for clean technology)
“Between 2014 and end of August 2022, BBB supported £505 million of equity investment in clean technology companies.”
The UK has the joint most generous capital allowance regime in the OECD, with full expensing available from 1 April 2023 to 31 March 2026. (All UK businesses investing in qualifying plant and machinery)
“We have the joint most generous capital allowance regime in the OECD with a policy of full expensing from 1 April 2023 to 31 March 2026.”
An increased rate of R&D Expenditure Credit relief applies for loss-making R&D-intensive SMEs, and the UK's R&D tax relief for large companies has the joint highest uncapped headline rate in the G7. (Loss-making R&D-intensive SMEs from April 2023)
“From April 2023 we announced a higher rate of R&D Expenditure Credit – which means that the UK's R&D tax relief for large companies has the joint highest uncapped headline rate in the G7 – and an increased rate of relief for loss-making R&D intensive SMEs.”
The government will invest £30 million of seed capital into the Big Nature Impact Fund (BNIF) to leverage private sector investment in nature projects in England. (Nature-based solution providers and land managers in England)
“the £30 million of seed capital we are investing into the Big Nature Impact Fund ( BNIF ), which will leverage private sector investment in a range of nature projects in England.”
The government will publish a series of net zero investment roadmaps by sector throughout 2023, and a roadmap for nature-positive investment by 2024. (Investors and businesses across net zero and nature sectors)
“Throughout 2023, we will develop and publish a series of net zero investment roadmaps . These will articulate investment needs by sector alongside summarising the relevant government policy and funding to make the sector investable. We will also publish a roadmap to guide nature positive investment in key sectors by 2024.”
The government will consult on a UK Green Taxonomy in Autumn 2023, with voluntary reporting expected for at least 2 reporting years before mandatory disclosure is explored. (UK companies of relevant size; government intends proportionality for smaller firms)
“We expect to consult on the Taxonomy in Autumn 2023... After the Taxonomy has been finalised, we will initially expect companies to report voluntarily against it for a period of at least 2 reporting years after which we will explore mandating disclosures.”
Government will consult on requiring the UK's largest companies to disclose transition plans on a 'comply or explain' basis, with consultation planned for Autumn/Winter 2023. (Large UK companies initially; proportionality intended for smaller firms)
“The consultation will take place in Autumn / Winter 2023, once the TPT has finalised its framework.”
Invest NI provides grants of up to £50,000 to eligible companies to invest in resource-efficient technologies, and fully funded technical audits to Northern Ireland businesses with annual energy/resource spend over £30,000. (Eligible Invest NI client companies in Northern Ireland)
“Grants of up to £50,000 are available to help with the purchasing of new equipment. Invest N I also supports delivery of sustainability reports which are available to all Northern Ireland businesses with an annual energy and resource spend in excess of £30,000.”
The Development Bank of Wales launched a Green Business Loan Scheme to help Welsh businesses reduce carbon emissions and save on energy bills. (Welsh businesses)
“the launch of the Bank's Green Business Loan Scheme providing Welsh businesses with a package of support to help them reduce carbon emissions and save on future energy bills.”
UK Export Finance's capacity has been increased from £50 billion to £60 billion to support UK exporters and supply chains. (UK exporters and their supply chains, including SMEs)
“the Chancellor has announced an increase in UKEF 's capacity from £50 billion to £60 billion to support UK exporters and supply chains.”
The government will consult on steps to support high-integrity voluntary carbon markets, positioning the UK as a global hub for voluntary carbon trading. (Businesses operating in or seeking to enter voluntary carbon markets)
“We will consult on the specific steps and interventions needed to support the growth of high integrity voluntary markets and protect against greenwashing. This will position the UK to serve as a global hub for voluntary carbon trading.”
Exports from low carbon and renewable energy industries increased by 67% between 2020 and 2021, compared to 6% for total UK exports. (UK businesses exporting low carbon and renewable energy goods and services)
“Between 2020 and 2021, it is estimated exports from these sectors increased by 67%, compared to total exports which increased by 6%.”
This briefing is enkii's interpretation of the official document — the official text always governs.
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