Welsh Bank Launches CO2 Automation Scheme for UK SMEs

In a UK first, the Development Bank of Wales has launched a new pilot called Perseus that will help small and medium-sized enterprises (SMEs) automate reporting on carbon emissions and energy use. The initiative aims to minimize the carbon accounting barrier for SMEs, enabling them to access green finance and make quantifiable strides toward becoming net zero carbon.

SMEs produce nearly 50% of UK business-related carbon emissions. However, most of them do not have the resources, equipment, and technical knowledge required to measure correctly and reduce their environmental impact. The Perseus scheme addresses these challenges by offering digital infrastructure that enables secure sharing of energy data with carbon accountants and banks without undermining confidentiality. Third parties cannot view the information without SMEs' permission to publish it.

The underlying intent of the Perseus scheme is to reduce the administrative expense SMEs must pay to disclose their carbon emissions and energy consumption. Reporting becomes automated, which makes it easy for companies to ease compliance with green finance regulations and gain greater access to green-linked funding at favorable terms. Through the inclusion of companies, banks, and carbon auditors within an encrypted digital platform, the scheme eliminates the inconvenience of green finance manual reporting.

Led by non-profit organization Icebreaker One, Perseus is supported by a coalition of leading institutions including NatWest, Barclays, the British Business Bank, and the Institute of Directors. The initiative reflects growing momentum within the UK financial community to deliver decarbonisation at scale through data-driven, scalable solutions.

Perseus is a part of an overall strategy to support environmental, social, and governance (ESG) ambitions by enabling SMEs—the UK economy's very lifeblood—towards embracing the tools and data needed to transition to more sustainable business activities. The call for these tools could not come at a more critical time with the UK boosting its climate agenda and pursuing net zero targets within the next generation or so.

Incorporation of precise, real-time carbon data can also facilitate more effective assessment of a company's environmental performance. Banks increasingly request verifiable emission data in order to offer green loans, and Perseus can help plug this gap by offering a credible digital solution.

While this is a pilot program, its aspiration is to become an open, standard platform whereby any SME may opt to join and have its operations harmonized with sustainability objectives. Having Britain's key banks on board signals that the solution has scalable confidence and has potential to unveil sustainable finance opportunity across industries.

In addition to supporting green loans, the system also supports SMEs in making carbon reduction planning on a long-term basis. In providing a standardised approach of measuring emissions, the initiative also aligns with broader regulatory and investor expectations on climate disclosures.

As the government agencies and lending institutions start to tie access to finance to concrete action on climate change, Perseus and similar tools will be sure to become essential. The Welsh pilot scheme, if successful, can serve as a national template for facilitating small businesses in transitioning to sustainable practices, and help the UK achieve its national climate targets more efficiently.

With the launch of this scheme, the Development Bank of Wales leads the way in sustainable finance innovation in the country. If embraced by many, Perseus is able to revolutionize the management and reporting of carbon data in the SME sector, making sustainability more accessible and tangible to firms of all sizes.

Source and Credits:
Development Bank of Wales through KnowESG