Redefining SME Productivity Measurement and Assessment for a Low Carbon Economy

Abstract

The UK faces the joint economic policy challenges of raising productivity and tackling climate change. This report challenges prevailing narrow market-based views of productivity, by examining the £4bn UK early stage Cleantech innovation finance market. We find that Cleantech innovation is frequently capital intensive and long horizon (5-10+ years), measured by shorterterm technology readiness level (TRL) and intellectual property (IP) progression. Longer-term sustainable productivity impacts remain little understood and, where applied, narrowly relate to customer adoption. This leads to Cleantech environmental impact investor logics that primarily relate to end user financial value (customer sales). There is little consideration for non-market values from, for example, circular economy (CE) and wider environmental spillover impacts (e.g. supply chains). Whilst few Cleantechs currently successfully commercialise, a small proportion exhibit high employment and sales growth and global environmental impact. Improved understanding of the broader environmental impacts of Cleantechs, through the adoption of environmental impact metrics (EIMs) can (i) add to a more holistic notion of productivity and (ii) improve the efficiency of the finance escalator, enabling more Cleantechs to contribute significantly to establishing the UK as a globally leading low carbon economy.