Seòmar agus comataidhean

Determination of Committee priorities for Session 6: Submission from Scotland's Enterprise Agencies

Submission for the evidence session on 21 September 2021

Dear Convener,

Scottish Enterprise (SE), Highlands and Islands Enterprise (HIE) and South of Scotland Enterprise (SoSE) welcome the opportunity to provide further information in response to the email received from clerks of the Net Zero, Energy and Transport Committee on 29 September. The just transition to a net zero economy is a key priority for all of us.  We recognise how important it is that Scotland’s economic development agencies are fully aligned to deliver the Scottish Government’s policy goals and targets, and to help businesses, people and communities grasp the emerging opportunities that will shape the transition.  It is in this spirt of collaboration our reply to the Committee’s request for further information comes in the form of a joint response from our respective agencies.

There are significant opportunities that will come from building effective collaboration around net zero.  Businesses need clear information, practical support and a good understanding of what is expected of them in return for that support.  This will help align investment, reduce emissions and create the good and rewarding jobs that people across Scotland want to see.  

The enterprise agencies are already supporting businesses to adopt fair work and progressive work practices.  We are now building on this to align the financial support we offer with the wider social and environmental purposes of business to support a just, net zero transition. 

We understand that the Committee has requested further information on five specific topics.  Our response addresses each of these points below.   It is important to emphasise that the three agencies work very closely together on a day-to-day basis.  While the precise detail and timing of the agencies’ approaches may vary, we are all committed to delivering very similar economic, but tailored, development support across Scotland to ensure businesses and other organisations will receive consistent support.

Information on updated strategies and plans for a transition to net zero from all three agencies

Scottish Enterprise

SE’s Net Zero Framework for Action, published in June 2021, explains how we can be a catalyst for change in accelerating Scotland’s just, net zero transition.  It sets out our approach and specific actions we are taking across all our activities and operations.  Building upon our strong track record in supporting low carbon innovation, investment and technologies, our Framework commits SE to: 

• Expanding net zero opportunities - supporting businesses, industries and investors to grasp fast-growing climate opportunities, helping refocus Scotland’s economy on a net zero future while safeguarding natural capital and improving collective wellbeing
• Supporting a just transition - helping businesses, industries and communities to deliver a just transition that is fair to all, safeguarding and creating good, green and high value jobs
• Leading and influencing change - incentivising more businesses to actively commit to sustainable practices, influencing others to accelerate the pace of change and maximising the opportunities and legacy of COP26  
• Becoming a net zero organisation – we aim to become net zero by 2040 and are making good progress in meeting our interim target of reducing emissions by 75% by 2030, compared to a 2015/16 baseline.

Highlands and Islands Enterprise

HIE’s Operating Plan for 2021/22 is focussed on the transition from safeguarding and resilience to supporting the economic recovery and sets out in detail the actions we will take and how we are monitoring our progress.  Our focus is on three key areas: 

• Jobs – helping businesses and community organisations retain and create jobs in the economy through advice, information, innovation and investment
• Net Zero Transition and Green Recovery – promoting and supporting business growth and community opportunities from Net Zero, create new green-jobs; supporting community organisations to consider and develop opportunities to decarbonise and from income generating opportunities arising from natural capital, such as peatlands, woodlands or seaweed
• Population and Place – we will prioritise those areas that have the greatest challenges including those with more severe demographic challenges or whether there are particular opportunities that require place-based approaches e.g. within the Blue Economy. 

HIE’s approach to Net Zero Transition and Green Recovery is described in its written submission to the Committee.   The approach will be further refined as described in our joint Enterprise Agency response to the 10 Year Economic Transformation Strategy and reflected in our own three-year strategy being developed under the auspices of the Enterprise and Skills Strategic Board.

South of Scotland Enterprise

SoSE’s ambition is for its area to be the first climate positive region in Scotland.  We will lead and facilitate the South of Scotland’s Just Transition to Net Zero, both directly through our support to businesses, social enterprises, communities and initiatives / projects, and more widely to champion a region-wide Just Transition to Net Zero.

Within the next six months, SoSE is committed to:

• A Just Transition to Net Zero to sit at the heart of the forthcoming three-year SOSE Action Plan and future annual SOSE Operating Plans, which include the development of several Net Zero outcomes
• Create a SOSE wide Net Zero Framework for Action, identifying activities we can pivot to Net Zero outcomes, and those that should not continue
• Establish an initial set of Net Zero conditions for SOSE funding (similar to the approach taken with Fair Work)

Net zero targets, including in relation to jobs, additional HVA and business developments 

Scottish Enterprise

As SE’s 2021/22 Business Plan makes clear, the transition to a net zero economy is a priority for our organisation.  SE aims to deliver up to 10,500 planned jobs paying at least the real living wage this financial year, which includes green jobs.  SE has captured CO2 savings from projects/ businesses we support for many years and this year, we aim to deliver up to 240k tonnes of estimated CO2 savings by businesses/projects.  

SE is currently reviewing its performance measurement framework for its next three-year plan 2022-25, which will be aligned to the National Strategy for Economic Transformation (NSET) and the National Performance Framework.  SE continues to work with its partner agencies, SEPA and NatureScot to develop robust consistent ways of measuring our contribution to the transition to a net zero economy.  The enterprise agencies also intend to shortly commission work to identify a methodology for quantifying the net emissions at a business plan level.  This top-down assessment will complement the bottom-up reporting of emissions reductions.

Alongside this, SE has also committed to the following during FY 2021/22:

• To develop an approach that links SE funding to business/ organisational commitment to addressing the net zero transition and Fair Work First (to be implemented in 2022/23)
• Implementing the Scottish Government’s Vision for Trade and cease trade support for fossil fuel goods and services activities in support of Scotland’s transition to net zero emissions
• Introducing a new programme of funding calls to target net zero outcomes.  The first call supported new and safeguarded green jobs and was funded through the Scottish Government’s Green Jobs Fund

Highlands and Islands Enterprise

Target outcomes are described in HIE’s Operating Plan.  Whilst it has no explicit organisational target relating to green jobs supported, green capital asset investment, external green investment secured or CO2 savings by supported organisations, it will track such measures, and again refine in the new three-year strategy.  

Key to this, as noted by SE above, HIE is collaborating with the Scottish Government, its fellow enterprise agencies and other parts of the Scottish public sector to develop a common and consistent methodology to defining and measuring our impact around net zero. HIE has also developed a Net Zero Ladder (Appendix 1), which will be used by client facing staff to assess the level of maturity or adoption of local carbon measures.  Over time, the aggregated information will enable a regional or sectoral assessment of the ability of companies to take responsibility for reducing their impacts and those of their supply chain.   The ladder will be deployed following Client Engagement Training later this Autumn.  

Working with SE and SOSE and under the Business Support Partnership, HIE will continue to review the tools available to support SMEs and communities to decarbonise.  For example, the Business Support Partnership has agreed that SE’s sustainability diagnostic tool will be digitised and adopted by all partners to help businesses identify actions and track progress (like the existing Fair Work diagnostic tool).  This complements the HIE Net Zero Ladder. 

South of Scotland Enterprise 

SOSE has supported the creation of the Regional Economic Partnership in the South of Scotland, which has produced the first Regional Economic Strategy.  This approach is based on six pillars, with a focus on putting the environment and sustainability at the forefront of growing our economy.

To meet our transitioning to net zero emission goals, improve wellbeing and create new economic opportunity, SoSE will harness the full potential of our natural resources and approach to land use to further improve our quality of life, restore nature, develop our visitor offer, adapt and enhance our resilience to climate change and deliver cleaner energy and greener jobs. 

Priorities: Harnessing & Enhancing Natural Capital

• The region has made progress in managing its resources in a more sustainable way, implementing better land management, decarbonising farming, forestry and fishing processes and generating more renewable energy, but there is scope for this to and we will go further – and the South to be seen as pioneering - so that more is made of our natural capital whilst preserving and enhancing it
• There is evidence to suggest that our region can go further in harnessing the social and economic benefits of natural capital, by better understanding its depth, breadth and future potential and embracing innovation and technology to add to its appeal in underpinning tourism, protect biodiversity, lower carbon footprints and develop nature-based solutions to problems. 

Seizing the Economic Opportunity of a Just Transition to Net Zero

• The region needs to develop renewable heat and power, and the infrastructure needed to move it around our large rural geography, to support the greening of our homes, workplaces and transport and deliver against Scotland’s legally binding targets to reduce and eliminate our carbon footprint
• With development opportunities of national significance and work on a regional Energy Master Plan taking place, SoSE will also prioritise investment in energy in the context of creating green jobs, supporting the visitor economy and providing opportunities for communities to pursue energy self-sufficiency 

Improving Efficiency of Homes & Buildings 

• The collective challenge of adapting homes to be low carbon, including a requirement to meet future Energy Efficiency Standard Social Housing milestones, presents a significant economic and social opportunity for the region and an anchor investment point for community wealth building, creating green jobs, supporting local supply chain development and addressing fuel poverty
• Planned changes to housing condition and energy efficiency legislation and standards at the national level, will be prepared for and greater collaboration across tenures forthcoming in response to help identify and implement solutions

Supporting Community Wealth Building and Growing Regional Supply Chains

• The South of Scotland has benefitted from an increased awareness of and commitment to sourcing locally due to the COVID-19 pandemic and local campaigns, creating a platform from which we will go further, sourcing local services and products to retain wealth – including the significant spending power of local anchor institutions – and reduce environmental impact
• SoSE will better connect local firms within key sectors, commercial centres and rural areas, to build awareness of local services, increase the commitment to developing regional supply chains and to identify opportunities to reduce and reuse waste via growing the circular economy within the region

Close the gap analysis and the work of enterprise agencies in this area

Scottish Enterprise 

SE recognises that more needs to be done to ensure our funding is more evenly split between women-led and male-led companies.  For example, around 24 per cent of the companies involved in our high-growth spin-out programme are female led. That is not enough, but the numbers are increasing.

We have several initiatives, including the Principally Women programme, where SE works alongside other organisations supporting the leadership development of women into business.  We have six cohorts now supporting 87 women.  SE also delivers the entrepreneurship development programme, Unlocking Ambition, which has supported 107 entrepreneurs, half of whom are women.

Highlands and Islands Enterprise

HIE’s approach is focused on supporting both young people and female entrepreneurs who have ambitious business ideas, tackling the unequal concentration of men and women in different types of occupation and at different pay levels, introducing talented young people to businesses and community organisations and working with companies to support fair and more productive business practices. 

We support the growth of the social enterprise sector and help people, particularly in remote, rural and island areas, to develop their communities.  Across all programmes 45% participation is female (and in those targeted at social enerprises, the female participation reaches 54%).  In respect of young people, more than 70% of participants are under 35.   More tailored programmes include W-POWER pilot in Argyll which has supported 70 rural female business leaders, Impact30 which has supported 80 businesses led by young entrepreneurs, and the Outer Hebrides Youn Entrpreneur Start Up Scheme (in partnership with Comhairle Nan Eilean Siar) providing support to 27 businesses   

South of Scotland Enterprise

SOSE is committed to inclusion and equality across all minority groups in South of Scotland, working with groups and individuals across businesses, communities and projects to support parity of access and achieving their potential.  

There are specific projects and programmes focused on women, young people and adults with additional support needs.  Key projects include the Better Lives Partnerships with their Innovative Skills programmes around autism and the Usual Place providing pathway to employment for Adults.

Updated information on the green jobs fund

Scottish Enterprise

As part of the Scottish Government’s Green Jobs Fund, SE will distribute £27m of green funding to businesses operating in Scotland over the next three years.  Included within this funding is the Green Jobs Call announced at the end of May.

This call was aimed at supporting businesses to create green jobs (these are new and safeguarded jobs that relate directly to the transition to net zero) or facilitate the transition of jobs and minimise environmental impacts by developing sustainable low carbon products or services.  Grants between £50,000 and £500,000 will be awarded to successful applicants, within the eligibility criteria shared here.

The Green Jobs Call, which is just one mechanism SE will use to distribute green funding, closed in July and applications are currently undergoing appraisal.  Our evaluation process is expected to be completed shortly and we can keep the Committee updated on this if that would be helpful.  

An updated position on Green Jobs Funding overall is provided in a recent PQ response published on 19th October, which can be accessed here.

Highlands and Islands Enterprise

Tranche 1 of the Scottish Government’s Green Jobs Fund is £50m, and the total programme value for HIE is £6.4m over four years.  The purpose of the fund is to support organisations that provide sustainable and/or low carbon products and services to develop, grow and create jobs.  HIE will focus its in-year allocation of the fund of £800k towards supporting projects that:

• Create jobs (not retain) and;
• Produce goods or provide services that benefit the environment or converse natural resources; and/or
• Involve making organisational production processes more environmentally friendly

Projects approved thus far with planned spend this year include £40k to Windswept project in Shetland and £194,000 to Uist Distilling in the Outer Hebrides.  We have also recently approved £234,554 from the HIE’s Green Jobs Fund to the applicant Trees for Life towards total project costs of £5,886,854 for the Dundreggan Rewilding Centre development.  The HIE funding proposed is towards the capital costs for construction of the Centre building and associated external works.  This project has been allocated towards our Green Jobs Fund allocation of £1.2million in 2022/23.  HIE publishes all its financial approvals on its website. 

Consideration is being given to future delivery of the Green Jobs Fund, seeking to learn lessons from SE’s call-led approach, and to also ensure fit with Tranche 2 of the Green Jobs Fund, which is managed centrally by Scottish Government.  

South of Scotland Enterprise

SOSE has fully allocated their Green Jobs Capital Fund of £400k to businesses in the South of Scotland.  This programme has been further supported by the creation of more green jobs with the Business Improvement and Innovation Fund and will form a key part of the future programme of Funding to build on the early successes with this approach.  

An example of this was a £50k funding award to Cochran Boilers in Annan to develop their products, providing more opportunities for green employment.  Another example is support SoSE provided to Scottish Borders firm, Indinature, to develop and deliver their green insulation product to market, creating 30 roles. 

Updated information on national park planning and consideration 

Scottish Enterprise

SE recognises the significant opportunity and management framework which National Park status provides.  As the Scottish economy and tourism industry recovers from COVID-19, the consideration of a new National Park is very much aligned with the national responsible tourism approach.  This approach sees communities, the environment and net zero being placed at the heart of all decision making with a clear balance across social, environmental and economic benefits.

Highlands and Islands Enterprise

HIE looks forward to the formal consultation on a new National Park for Scotland.  National Park status can be a major attractor for people wanting to live in such an area, and for visitors and for the wider tourism sector. The experiences of Scotland’s two existing national parks would be informative on the socio-economic benefits that National Park status for an area and its economy can bring.

South of Scotland Enterprise 

SOSE is committed to protecting and enhancing our national environment, recognising the additional economic and community benefits that can bring for the South of Scotland.  The significant investment of £1.9m, over the next 5 years, in the Galloway and South Ayrshire UNESCO Biosphere demonstrates our commitment to supporting biodiversity, boosting jobs and increasing sustainable tourism.

SOSE is currently focused on working with the Biosphere as they seek reaccreditation next year.   In its Programme for Government, the Scottish Government committed to designating a new National Park by the end of this Parliamentary session, recognising that the designation should be in response to community demand.  SOSE looks forward to working with the Scottish Government as it develops the detail of the process for agreeing designation and assessing the benefit potential National Park status could bring. 

In summary, Scotland’s enterprise agencies are committed to working together to support Scotland’s just transition to a net zero future and to assist businesses take advantage of net zero opportunities, as well as ensuring the agencies are exemplar organisations.  There is an opportunity to ensure that Scotland and all its regions are at the global forefront of best practice.  

This collaboration, however, needs to go beyond enterprise agencies, Scottish Government, and local authorities and ensure it continues to involve wider partners involved in economic development, such as investors, landowners and further/higher education.  While the agencies have a particular role to play as catalysts for change, we are not funded to support every business, community or organisation.  We know solutions will be developed and delivered by those beyond the remit of the enterprise agencies, which is why we look forward to the Scottish Government setting out strategic goals for the entire ecosystem.

Thank you for the opportunity to provide an additional response and I hope this information is helpful in informing the work of the Committee.

Kind regards,

Andy McDonald, Head of Low Carbon Transition, Scottish Enterprise

Ewan Mearns, Team Leader, Strategy, Scottish Enterprise

Audrey MacIver, Director of Energy Transition and Net Zero, Highlands and Islands Enterprise

Dr Martin Valenti, Director of Net Zero, South of Scotland Enterprise

Claire Renton, Head of Area Operations, South of Scotland Enterprise

Accessibility

We aim to make sure all correspondence is published as a fully accessible pdf. However, when correspondence documents are sent to us by an external organisation this is not always possible. If you need this correspondence provided in an alternative format, please contact the clerk of the committee. Further information can be found in our accessibility statement.