Foundational Economy

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Backing Local Firms Fund – How Low Carbon Timber Networks are Supporting a Sustainable Economy

Wales’s commitment to reaching net zero emissions has brought greater focus on building with low-carbon materials, sustainable forestry, and strengthening the local economy. Timber is an important part of this shift, offering benefits such as reducing the overall carbon footprint of buildings, making structures more energy-efficient, and supporting local jobs and communities. 

However, the timber and housing industries face some difficulties, including complicated supply chains, limited options for training, tough competition, and a lack of cooperation between different sectors. 

Wood Knowledge Wales (WKW) works to support teamwork and shared efforts across forest-based industries to boost prosperity and wellbeing in Wales. The Low Carbon Timber Networks project aims to tackle these challenges by creating strong partnerships that bring together housing providers, forest managers, manufacturers, designers, builders, researchers, and other key groups to work together and develop shared solutions.

The approach

The Low Carbon Timber Networks project delivered an ambitious program of sector-wide engagement:

  • 28 Community of Practice meetings, held both online and in person, covering topics such as forestry land use and contractors.
  • Engagement coordinated with over 95 organisations, including social housing developers, architects, timber frame manufacturers, sawmillers, contractors and land‑use experts, helping to improve and strengthen the supply chain networks.

Impact

The Communities of Practice (CoPs) created a variety of practical and strategic benefits. The Strengthened Networks built a thriving network of 60+ Welsh organisations, expanding to over 95 participants during the project. This work enhanced collaboration across forestry, manufacturing, construction and housing. The Communities of Practice (CoPs) created a variety of practical and strategic benefits. Additionally, the network was able to create and benefit from training and skills development sessions, based on the specific needs of the industry, and provided valuable skills and knowledge.

The Communities of Practice (CoPs) served as advice-sharing spaces for Welsh Government projects. They provided valuable insights for the Welsh Government’s Timber Industrial Strategy and played a part in major programmes like Tai ar y Cy. This project helped develop ideas for procurement that align with net zero goals and encourage greater use of Welsh timber. By promoting the use of low-carbon building materials and supporting housing providers to cut down the amount of carbon embedded in buildings, the initiative helps strengthen local supply chains that are vital for Wales’s sustainable future.

This joint effort across different sectors helped to bring about new ideas and solutions that covered all parts of Wales’s supply chain.

Challenges

WKW identified several challenges and responded proactively:

  • Engagement capacity varied, especially among small businesses. To manage this WKW increased outreach and used site visits to maintain participation.
  • Competition across the sector sometimes restricted collaboration. However, Neutral, trusted facilitation helped overcome this.
  • Gaps in training and future workforce pipelines were evident. WKW fed into skills‑development planning and influenced sector education conversations.

Looking ahead

Wood Knowledge Wales aims to build on the success of the Low Carbon Timber Networks by:

  • Expanding CoP membership to new sectors and disciplines.
  • Strengthening the forestry education network to address long-term skills needs.
  • Continuing to support government and industry in scaling low-carbon construction.
  • Developing new opportunities for locally owned businesses within the Foundational Economy.
  • Acting as a central enabler of sustainable growth through Welsh timber.

Wood Knowledge Wales is strategically positioned to enhance its impact and contribute to the development of a resilient, low-carbon built environment in Wales. This project underscores the importance of building trust-based networks and maintaining flexibility in engagement strategies across all sectors of the Foundational Economy. Through initiatives like this, Wales is progressing towards its commitment to achieving net-zero emissions.

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Backing Local Firms Fund – How Circular Economy principles can help Welsh SME’s work towards Sustainability

Introduction to Context

Wales’s Foundational Economy, encompassing everyday essential services such as care, housing, food, transport and energy, has long experienced structural challenges, particularly among smaller organisations facing capacity constraints, limited innovation infrastructure, and barriers to adopting circular and fair‑work practices.

These challenges are particularly acute among SMEs, which often lack access to structured learning and collaboration networks. FEIN was created to address these systemic barriers by providing a practical, regionally rooted framework that aligned with the Well-being of Future Generations Act and the Welsh Government’s ambitions for Net Zero and a fairer economic landscape.

The Approach

The Circular Economy Innovation Communities programme (CEIC Programme) is a two-day experiential workshop that introduces design thinking and circular‑economy principles. FEIN engaged 34 organisations from the Cardiff Capital Region and Swansea Bay Area through a structured programme of:

  • Experiential workshops
  • Mentoring and Specialist Support
  • Network Building
  • Peer‑learning activities with Practical Planning and Innovation Tools

The programme was enriched by collaboration with partners such as WRAP Cymru and Cwmpas, who provided technical guidance on procurement, marketing, resource efficiency, and fair‑work implementation. Participants developed innovation, HR, and Net Zero action plans tailored to their organisational context, while two new regional networks, in Cardiff and Swansea, were established to support ongoing collaboration. Participants consistently reported that the interactive format deepened understanding and translated effectively into workplace practice.

Impact

Between 2023 and 2024, 34 organisations joined the program Including 17 private SMEs, 7 charities, 5 community organisations, 4 social enterprises, and 2 public‑sector departments. During their participation in this program, Participants, 17 from organisations in the Cardiff region and 7 in the Swansea Region developed:

  • Clean Growth/Net Zero plans
  • Fair Work/HR development plans
  • Innovation plans

The programme generated meaningful improvements in innovation confidence, sustainability practices, and workplace culture.

  • 80% of participants reported increased innovation skills and understanding of circular and foundational economy principles
  • 77% reported improved circular‑economy knowledge; 72% improved innovation knowledge.
  • 94% of participants recommended the programme
  • 55% of organisations adopted the Real Living Wage, with a further 30% planning to do so, demonstrating a major shift toward fairer work practices

The development of multiple innovations, Net Zero, and fair‑work plans provided organisations with practical roadmaps for future action. This action has contributed to an increase in Fair Work adoption, an increase in innovation-active SMEs, and a Decrease in carbon footprints across participating SMEs. FEIN also strengthened relationships between SMEs and public‑sector partners, contributing to a more connected and resilient regional ecosystem.

Challenges

Some SMEs faced limited capacity to fully engage with circular‑economy practices or sustain innovation activity beyond the workshops. While the programme was praised for its inspirational style, a few participants found aspects of the content academic in tone. Regional economic disparities also shaped the readiness of organisations to adopt new practices. Nonetheless, the structure of the programme, particularly the mentoring and peer‑learning elements, helped organisations overcome many of these obstacles.

Looking Ahead

Evaluation findings suggest strong potential for scaling the FEIN model. Many participants expressed interest in continued support, further funding opportunities, and additional collaboration. Future iterations of the programme may focus on widening accessibility, refining delivery methods, and deepening support for circular‑economy implementation.

The FEIN model has demonstrated clear value as a driver of inclusive, sustainable economic development, deeply aligned with the Future Generations Act and Wales’s broader ambition for a resilient foundational economy.

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Backing Local Firms Fund: Unlocking Welsh land for nature-friendly food growing

To advance Wales’s Ambition for a more resilient, localised and nature-friendly horticulture sector, the Future Farms partnership has supported the planning permission and infrastructure for three new small-scale horticultural enterprises with rural enterprise dwellings in Powys. By laying the groundwork, creating planning permission guidance for small-scale growers and building infrastructure to pilot the guidance, the Future Farms project has taken big steps toward increasing land access for small-scale agroecological horticulture throughout Wales.

Background and vision

Wales faces a challenge: a limited local food supply. Domestic fruit and vegetable production is low, new growers struggle to enter horticulture, and planning rules often stop small-scale farmers from living on their land. To tackle this, Wales needs a more localised food system that uses agroecological methods – farming that supports biodiversity, ecosystem health, fair work, and strong local communities.

The Future Farms Partnership was created to address these issues. Its vision is to grow more agroecological horticulture businesses across Wales through foundational economy principles:

  • Unlocking publicly owned land for food production
  • Supporting fair livelihoods for growers
  • Building a rural economy based on local supply and community wellbeing

By boosting small-scale horticulture on public land for local fruit and vegetable production, the partnership will help public bodies buy Welsh produce locally, seasonally and sustainably.

The project has piloted 3 new horticulture enterprises on Wern Farm near Newtown, Powys, to show what’s possible when planning policy positively supports small farms.

The approach

The Future Farms project created three small horticulture businesses with homes for growers through four key phases between 2024 and 2025:

Phase 1 – Planning Permission

The project secured approval for three micro-horticulture enterprises on a Powys County Council farm, including temporary Rural Enterprise Dwellings (REDs).

Phase 2 – Policy & Guidance

The project worked with Specialist consultants (TerraPermaGeo), SFG planners and Powys CC and Brecon Beacons National Park Authority to develop new planning guidance for REDs in small-scale horticulture.

A collaboration with Shared Assets, the Landworkers’ Alliance co-produced a practical “How To Guide” for growers to apply for REDs in small-scale horticulture.

Phase 3 – Infrastructure & Testing

The project commissioned essential surveys (SuDs, flood, ecology, tree assessments) and submitted a full planning application—creating a template for future growers.

Phase 4 – Supporting Growers

After planning permission approval, three enterprises began operating at Wern Farm, backed by partnership organisations and the wider horticulture network.

This approach combined policy innovation, practical testing, partnership working, and community engagement.

Future Farm’s progress so far

Piloting Wern Farm

  • The project piloted the new guidance at Wern Farm, securing a new dwelling and establishing three horticultural enterprises on a 15-hectare site.
  • Over 2,400 tree varieties have been planted, and regenerative agroecological practices are improving soil health and biodiversity.
  • Further infrastructure improvements and the introduction of renewable energy is being supported by funding from the Shared Prosperity Fund.

Policy and System Change

  • The new planning guidance for Rural Enterprise Dwellings was adopted by Powys County Council and Brecon Beacons National Park Authority, with strong support from planning teams.
  • A national horticulture planning task group has been established.
  • The guidance is now being considered for inclusion in future Planning Policy Wales updates.

Capacity Building and Knowledge Sharing

  • Weekly partnership meetings built shared understanding.
  • The resources shared and created include:
    • “Criteria for Land for Small Farms”
    • “Notes for Developing Leases”
    • Survey lists for horticulture planning applications
    • Grower‑oriented planning tools
  • Over 35 growers contributed their knowledge and experience to the How To Guide.
  • Over 60+ planning officers were trained in the new planning guidance as of January 2025
  • Ongoing support continues through steering group members and new partnerships.

Challenges and lessons learned

Key lessons learned from this project have been invaluable in guiding its progress and informing future projects:

Policy planning

While creating entirely new policy can be challenging, early engagement with planning policy officers and working from the base of existing policy, interpreting and aligning it with a specific goal, proved crucial.

Initially, the planning phase of this project took longer than expected due to workload pressures within local planning authorities, the need for additional surveys and data, and the typical delays associated with complex rural applications. However, the project found that by working with public bodies with a proactive, “can-do” attitude, the process can run smoothly.

Governance and Capacity

The large, multi-partner steering group created challenges related to time management and decision-making clarity. However, being flexible and smaller working groups, and clearer reporting structures, although stretched staff capacity, ultimately lead to enhanced efficiency.

Identifying partner skills early and allocating roles clearly proved essential. Effective collaboration among planners, growers, and land officers was critical. This project garnered quick support from farmers and engagement with the local community helped to avoid objections.

Looking ahead for future farms

Projects of this nature have the potential to substantially enhance the Foundational Economy by strengthening local food systems and facilitating community wealth development. By increasing the local production of fresh, seasonal vegetables in a way that supports nature recovery objectives, we can support sustainable rural livelihoods. Furthermore, by using public land, such as county farms, can bring important economic, social, and environmental advantages to Wales.

The success of the Future Farms pilot has generated a lot of momentum to expand this approach across Wales. Future plans for this project include:

  • Collaborating with more Local Authorities to adapt and roll out the guidance.
  • Working with housing providers to address accommodation needs for new farmers.
  • Identifying further county farm sites in Powys suitable for horticultural enterprises.
  • Continuing training for growers navigating the planning system.
  • Supporting national policy development on horticulture and rural enterprise dwellings.

Future Farms has demonstrated that, with the right planning, interpretation, collaborative partnerships, and practical testing, Wales can unlock land for new agroecological enterprises and build a thriving, resilient horticulture sector. The project has already had a measurable impact in Powys and is influencing national policy. It offers a replicable model for using planning as a tool to strengthen local food systems and the Foundational Economy, embedding long‑term benefits for communities, the environment and the nation.

Future Farms has shown that with careful planning, collaboration, and practical testing, Wales can make better use of land for sustainable farming projects and develop a strong horticulture sector. The project has already made a real difference in Powys and is influencing national policy. It offers a model that others can follow, demonstrating how planning can be used to strengthen local food systems and support Wales’s social and environmental wellbeing in the long term.

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Backing Local Firms Fund – Localising the Welsh food system for the public plate

The two programs, Authentic Foods (Hirwaun)  and Celtica Foods, are working together to increase the availability of healthy, Welsh-grown food in public sector meals. They aim to:

  • Build a strong, reliable network that connects food from farms to public plates.
  • Create climate-resilient, commercially viable multi-portion meals for schools and hospitals.

Background and vision

Castell Howell Foods (CHF) is a wholesaler committed to embedding sustainability and local sourcing into food supply across Wales. Recognising the risks of heavy reliance on imported produce, CHF set out to reshape public sector supply chains. By prioritising Welsh-grown vegetables and meat products, the two new programs set out to deliver healthy meals to schools and hospitals that are:

  • Resilient to a changing climate
  • Supporting local growers
  • Helping to reduce carbon emissions
  • Positively impactful to the food system beyond financial profit

“The supply chain has to work collaboratively, especially with the impacts of climate change being seen. We need that holistic collaborative approach to reverse out of the dependence on an increasingly risky global food system.” – Edward Morgan – ESG Manager Castell Howell Foods 

The approach

From the start Castell Howell knew that any effort to unpick and detach from the global food system would need to involve those at every stage of the food process – from growing, washing, packing and distributing to processing, tasting, purchasing, catering and eating. The Wholesaler needed investment to change the supply chain. The Welsh Government’s Backing Local Firms Fund enabled the two complementary projects to be launched:

  • Authentic Foods: focused on evolving the public sector vegetable supply chain by working with growers, local authority caterers, and procurers to develop lower-carbon, nutritious multi-portion meals using Welsh produce.
  • Celtica Foods a project working to develop a new product of value-added Welsh meat-based foods for schools and wider public sector supply, including hybrid recipes enriched with vegetables and pea protein.

Growth, progress and early outcomes

Authentic Foods

Between 2024 and 2025, CHF purchased and transported 32 tonnes of Welsh vegetables all delivered directly from working with 8 Growers to local schools. The Authentic Foods project has allowed CHF to work closely with Food Sense Wales through the Welsh Veg in Schools Programme, alongside companies like, Holden’s Bwlchwernen Farm, Awens Organics, Bonvilston Edge, and Langton’s Farm. Strong relationships have been developed across the supply chain, making Welsh food a priority at the heart of public sector catering. This has helped shorten the supply chain for vegetables and supported local Welsh businesses.

Thanks to the support from this project, CHF has been able to help farmers meet Farming Connect standards and improve on-farm efficiency processes. A valuable finding was that previously, Welsh-grown vegetables had to be sent out of Wales to be washed and packed, then sent back to be eaten. This project provided funding to wash and package the vegetables. Now, with new equipment, vegetables like carrots can be grown, processed, and eaten within Wales, saving time, money, and reducing environmental impact.

This initiative provides a useful example for wider public procurement of local Welsh vegetables. It highlights the importance of transparent procurement practices that consider not just price but also social benefits, environmental effects, and community involvement. Understanding the true social value of these purchases helps Local Authorities make more informed decisions about selecting local Welsh produce, beyond just considering the cost.

 “One of the key outputs is our collective understanding of what can be grown profitably in Wales, what schools want, and aligning harvest with menus, and menus with harvest. Spinach, chard, cucumbers, tomatoes and courgettes available during the summer months, however with limited scope to sell to the public sector when harvested in July/August.” – Edward Morgan – ESG Manager Castell Howell Foods 

Celtica Foods and Authentic Foods

Since 2023, CHF, through Celtica Foods and Authentic Foods, have created a suite of school meals that are healthier, better for the planet and more cost-efficient to produce. Dishes such as Welsh Beef Bolognese, Cauliflower Cheese, and tomato bases enriched with spinach and chard will improve meal nutrition and lower carbon impacts. The creation of Welsh meat hybrid meatballs containing Welsh beef/lamb with spinach and chard will improve nutritional density and cost efficiency through local sourcing.

Understanding how important consumer feedback is, the project organised tasting sessions with over 500 pupils and their families across Caerphilly, Torfaen, Swansea, and Carmarthen. This allowed the children to share their honest opinions about meals made with Welsh produce. Their feedback helps to refine and improve the recipes, ensuring the meals are enjoyed by children. Additionally, this process provides valuable insightsfrom the children eating the food to the local farmers and growers, helping strengthenthe connection in the food supply chain.

Challenges and lessons learned

Understanding the obstacles to creating a localised food supply chain was helpful for both projects and will guide future efforts. The main lessons learnt include: 

  • Appreciating that growers need fair ways to share risks across the supply chain and long-term collaborative planning to keep them engaged. 
  • Recognising the investment required in infrastructure and capital costs to scale up volume, e.g. harvesting equipment, storage, processing & bagging and extending life.
  • Making sure that growing seasons align with the school term for meals can be tricky, especially with changing weather patterns that bring more extreme conditions. The project found that if food was harvested too early, it created gaps in the system, such as limited storage and facilities for extending life (such as freezing), which made it harder to expand production. 
  • The price of Welsh lamb can fluctuate quite a lot, which makes it difficult to plan costs consistently. 
  • When delivering leafy greens and lamb-based meals to children, acceptance varied depending on the region; so, customised marketing will be needed to encourage more children to try certain dishes.

Looking ahead

In 2026, CHF aims to buy 40 tonnes of Welsh vegetables, working closely with growers to invest in the right places to increase efficiencies and reduce gap prices. The aim is to supply 12 of Wales’s 22 local authorities, whilst continuing to measure carbon emissions and focus marketing efforts on lamb and leafy greens. The company also plan to develop new hybrid products, including flexitarian options.

Investment will be needed for:

  • Infrastructure:  Larger washing and packing machines to make processes cheaper and more efficient.
  • Efficiency: Investment is also needed to improve efficiency on farms, ensure health and safety for growers, and cover the costs of automation. 
  • Availability: It’s important to reduce the difference in cost between organic and non-organic vegetables.
  • Flexibility: All calculations need to be tailored to seasonal growing, and risk needs to be accounted for to support commercial success. For example, growing vegetables on a small scale, like an acre, involves costs that we need to understand and manage, especially when upscaling to field-scale crops. Financial support, such as loans to help with cash flow, can make the scheme more sustainable. To make growing vegetables less risky, fixing prices and sharing risks with supply chain partners can be a stable path.

Both the Authentic Foods and Celtica Foods programs demonstrate that sourcing locally on a larger scale is possible, welcomed and brings environmental, economic, and social benefits. The continued collaborations between Castell Howell and local food supply partners are working to build a resilient, health-focused food system that supports Wales’s people and foundational economy.

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Backing Local Firms Fund – Tonnes of change  

“We are excited to be growing veg for schools because it’s important that children have nutritious food and know where it comes from. Healthy food, healthy children, healthy Wales.”
— Geraint Evans, Welsh Grower

Introduction

The Welsh Veg in Schools initiative is a pioneering project that aims to increase the production and consumption of organic Welsh-grown vegetables by supplying them directly to primary schools. By aligning local food production with public sector procurement, the initiative offers a powerful example of how sustainable food systems can support health, education, and the environment, while strengthening local economies.

Launched with support from the Backing Local Firms Fund, the project brings together farmers, distributors, policymakers, and educators to deliver fresh, organic produce to school meals across Wales creating meaningful connections between children and the food they eat.

Background and vision

At the start of this project, an overwhelming 94% of vegetables used in primary schools in Wales were sourced from outside the country, often frozen and non-organic. The Welsh Veg in Schools project set out to change that by:

  • Increasing local organic vegetable production.
  • Creating new markets for Welsh growers.
  • Promoting sustainable agriculture and biodiversity.
  • Supporting children’s health and food education.

The project is coordinated by Food Sense Wales, in collaboration with Castell Howell (Wales’ largest food distributor) and Farming Connect Horticulture, run by Lantra. These partners are part of a wider network of growers and stakeholders working to create a fairer, more resilient food system in Wales.

Growth and progress

Woman smiling inside a poly tunnel used for growing veg

What began three years ago with just one grower has now grown into a vibrant, multi-stakeholder project. By 2024:

  • 8 growers were actively supplying schools.
  • 14 tonnes of organic Welsh veg were used in school meals.
  • The project reached 219 schools across 6 local authority areas – Cardiff, Carmarthenshire, Monmouthshire, Powys, Bridgend and the Vale of Glamorgan.
  • 400 children visited four farms enabling them to connect directly with the land and the farmers growing their food.

By 2025, the initiative has scaled to:

  • 15 local growers participating.
  • 12 local authorities engaged.
  • 3 wholesale partners distributing produce across school catering networks.

This expansion means that approximately 1 million portions of local, organic veg will be served to school children in Wales.

Challenges and lessons learned

2023 presented significant challenges:

  • Delays with funding disrupted planning cycles, misaligning crop production with school meal requirements.
  • Adverse weather led to reduced yields, impacting supply.

However, these challenges led to valuable learning:

  • Earlier coordination with local authorities began in late 2023, allowing better crop planning.
  • More growers were brought on board to build resilience and reduce risk.
  • Castell Howell’s existing supply chains absorbed surplus produce, avoiding waste.

The Backing Local Firms Fund played a critical role in allowing experimentation, system development, and the formation of new networks. It also opened doors to collaborate with other food projects across Wales.

Impact and looking ahead

The project has proven that a local, organic supply chain for school food is not only possible but desirable. Interest has grown across Wales and beyond, with stakeholders from across the UK contacting the team to learn how to replicate the model in their own regions.

Key highlights to date include:

  • A shift from imported to local organic veg in school meals.
  • Creation of alternative income streams for Welsh growers.
  • Hands-on learning experiences for children, connecting food, farming, and health.
  • The establishment of a new North Wales growers’ group, expanding the reach of the project across the country.

In April 2025, Food Sense Wales published a series of reports noting the project’s achievements. You can read the various reports by clicking on the relevant links below:

Welsh Veg in Schools: Summary Report

Welsh Veg in Schools: Full Report

The Story of Welsh Veg in Schools

Looking to the future, Food Sense Wales is actively exploring new funding opportunities to grow the project further. The ambition is clear: to bring more Welsh-grown organic produce into more Welsh schools, involving more local authorities, more growers, and more children in the journey toward a sustainable, healthy food system.

Conclusion

The Welsh Veg in Schools project exemplifies how public procurement can drive meaningful change, from farm to fork. It strengthens local economies, supports sustainable farming, and helps young people understand and appreciate where their food comes from. Thanks to the support of the Backing Local Firms Fund, the foundation is set for long-term, scalable success across Wales and beyond.

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Environmental Management Systems: A guide for Welsh SMEs

Consuming electricity and water, producing waste, operating machinery and processing natural resources – these are just some of the ways that businesses interact with the environment at operational level and through their supply chains.  

Businesses of all sizes are realising the need to understand, manage and improve their environmental impacts to ensure they can operate and grow sustainably. An Environmental Management System (EMS) proportionate to the size and activities of the organisation is a key framework for helping businesses to do this. 

However, it can be more challenging for SMEs to measure, manage and report on climate and environmental goals, due to constraints of time, cost and human resources. So, what are the options? Do you need to comply with the internationally recognised ISO 14001 or are there alternatives? 

We hope that this guide will help with understanding (i) the key elements of an EMS, (ii) the benefits and opportunities they bring for SMEs and (iii) provide an overview of the different certification standards for EMS implementation and support for SMEs in Wales. 

Remember, there are many benefits to gaining an EMS certification but it is the journey towards it that counts in terms of practical actions and outputs. All certifications will require resource. If this is not possible for your organisation right now we hope that this guide will still be valuable to steering you towards meaningful actions.    

What is an EMS?

An EMS is a structured framework of policies, procedures and practices which help organisations assess, manage and improve their environmental impact.  

The primary goals of an EMS are to ensure: 

  • Compliance with environmental requirements (for example, under an environmental permit issued by Natural Resources Wales) 
  • The efficient use of resources 
  • Waste reduction and minimal pollution 
  • The continual improvement of environmental performance 

Read the ISO article on ‘The benefits of implementing an environmental management system for your business.’  

A core strength of any EMS should be enabling continual improvement of environmental performance. Continual improvement as defined in ISO 14001, refers to recurring activities to enhance environmental performance. For example, organisations can identify improvement opportunities through audits and monitoring progress against objectives and targets.  

For an SME, this could be implementing behaviour change initiatives to support carbon reduction and nature related goals, such as eliminating deforestation. However, from a wider perspective, continuous improvement might look like an increasing number of business areas or processes being covered by the EMS, or an accumulation of knowledge and skills in dealing with environmental issues. Overall, it’s about a move from operational management of the environment to a more strategic approach.  

The benefits of implementing an EMS for SMEs in Wales

  • Manage and improve environmental impacts: by integrating environmental considerations into their operations, SMEs can minimise their ecological footprint and reduce negative impacts on the environment. 
  • Risk Management: The tools within an EMS provide a systematic approach to identifying and managing environmental risks and help SMEs to future proof their business and avoid potential liabilities and disruptions. 
  • Cost savings: Implementing efficient resource management practices can lead to cost savings for SMEs. By optimising energy and water usage, reducing waste generation, and implementing recycling initiatives, SMEs may see reductions in utilities bills and other financial benefits from more efficient and innovative processes. 
  • Compliance with regulations: An EMS helps SMEs comply with environmental regulations and legal requirements. By staying up to date with environmental legislation, SMEs can avoid penalties and legal issues. 
  • Enhanced reputation and competitive advantage: Demonstrating a commitment to environmental sustainability is important for many potential employees and customers. Increasingly, it is also a requirement for public sector buyers to take into account the sustainability of their contractors. For example, in Wales, the Social Partnerships and Public Procurement (Wales) Act introduced a Socially Responsible Procurement Duty and at UK level,  PPN 06/21 mandates that carbon reduction plans be taken into account in major government procurement contracts. 
  • Improved access to finance: An EMS can help SMEs to identify and manage steps they can take to fulfil requirements under Business Wales’ Green Growth Pledge. It can also act as the catalyst for innovation financing, for example, the Green Business Loan Scheme from Development Bank of Wales. 

EMS Standards and Certifications

When starting out to create an EMS, there are a number of standards available for SMEs in Wales. The main ones covered in this guide are: 

ISO 14001:2015 (Environmental Management Systems – Requirements and Guidance for Use)  

The most widely used voluntary EMS standard globally, providing a holistic framework ‘encompassing all aspects of an organisation’s environmental management and offering tools for continuous improvement’. Certification is available for organisations that have implemented the requirements of ISO 14001.  

ISO 14005:2019 (Environmental Management Systems – Guidance for a flexible approach to phased implementation) 

This standard provides guidance for a phased approach to establish, implement, maintain and improve an EMS. It may be particularly useful for SMEs as it provides flexibility and allows organisations to develop their EMS at their own pace. Full implementation of the guidance will result in an EMS that aligns with ISO14001.  

Note that BSI’s earlier guidance standard for SMEs, BS8555, which also provided a phased approach to EMS implementation has now been withdrawn and replaced by ISO 14005.  

Groundwork’s Green Dragon Standard 

Green Dragon is a UK based environmental accreditation awarded to ‘businesses that take action to understand, monitor and control their impacts on the environment’. It operates on a staged based system over five levels, allowing a business to progress in its own time.  At Level 5 the Green Dragon standard is equivalent to ISO 14001.  One of the advantages of Green Dragon is its recognition and support from Business Wales and its acknowledgement in Welsh Government procurement processes. 

Green Key / Gorian Gwyrdd  

Green Key is an eco-accreditation awarded to businesses operating in the tourism sector. Green Key certified businesses meet a set of high standard environmental requirements across 13 areas including environmental management, staff involvement, energy and water conservation, waste management, and food and beverage. In Wales, Green Key is operated by Keep Wales Tidy on behalf of the Foundation for Environmental Education (FEE).  

EU’s Eco-Management and Audit Scheme (EMAS)

EMAS is the EU’s voluntary scheme applicable to all organisations in the public and private sectors who want to evaluate, manage and improve their environmental performance. EMAS is broader and more rigorous than ISO14001 (as explained below) but ISO 14001 satisfies the requirements for the EMS component. Following Brexit, the UK no longer has a ‘competent body’ responsible for EMAS, however, organisations doing business in the EU might find EMAS Global registration useful and we have included information about the main requirements and links to further information in this document for completeness. 

It is worth noting that businesses do not need to adhere to a certain standard for their EMS and might decide to design a bespoke system. However, using one of the available standards might well be less resource intensive and can help to ensure a robust EMS that provides reassurance to stakeholders.  

The following sections of this guide provide a bit more detail about the above standards to help you identify which might be the right approach for your business.   

Please note this is a guide based on a summary of available online information. Please check the web links given for the most accurate and up to date details. 

4. International EMS standards ​

ISO14001:2015 (Environmental Management Systems – Requirements and Guidance for Use) 

ISO 14001:2015 is an internationally recognised, holistic framework for an EMS, encompassing all aspects of an organisation’s environmental impact and offering tools for continuous improvement.  

What is involved? 

The basis of ISO 14001 (as with other EMS standards) is the management system process Plan-Do-Check-Act (PDCA). The PDCA cycle is applied to the overall EMS, as well as individual processes, and enables organisations to achieve continual improvements to their environmental performance through improvements to the EMS. 

The Guidance describes the requirements for setting up and implementing an EMS including: 

An environmental policy: A statement that outlines an organisation’s commitment to environmental sustainability. 

Planning: This involves identifying environmental aspects and objectives of an organisation, setting targets and establishing programmes to achieve them. 

Implementation: This stage involves putting plans into action, allocating resources and assigning responsibilities. 

Checking: Regular monitoring of performance against objectives and targets is critical to ensure the timely implementation of corrective actions. 

Management review: A formal review of the EMS supports its continued effectiveness and suitability. 

EMS Plan-Do-Check-Act Model (Source: Westcon,2017, online) 

Costs, Certification and Training  

The standard can be purchased from the ISO website for approximately £130 and businesses can choose to implement the standard without the costs of certification. There are also various free and IEMA accredited training modules to assist with implementation. 

As mentioned above, certification is optional but can provide both organisations and their customers assurance that ISO 14001 has been implemented in a robust manner.  

Costs of certification from organisations accredited by The UK Accreditation Service (UKAS) vary but online quotes without commitment can be readily obtained. 

Certification is typically awarded for three years, subject to annual surveillance visits. The standard itself undergoes revisions periodically (typically every 5-10 years).  

ISO 14005:2019 (Environmental Management Systems – Guidance for a flexible approach to phased implementation) 

Whilst ISO 14001 is applicable to all types and sizes of organisation, the full implementation of an EMS at the same time might be prove challenging for some organisations and particularly SMEs where time, cost and human resources can be limited.  

At international level, a phased approach to implementing an EMS was therefore developed (previously the BSI standard BS8555:2016 which has been subsumed by ISO 14005) to encourage and guide SMEs to meet the requirements of ISO 14001. 

What is involved? 

The phased approach in ISO 14005 is designed to provide flexibility for an organisation to develop their EMS over a number of phases to ultimately meet the requirements of ISO 14001. 

The number of phases an organisation chooses to implement at any one time is flexible and can be determined depending on resources and priorities. Each phase is broken down into six consecutive stages to be completed over time. SMEs can monitor progress using the maturity matrix in Annex A of ISO 14005 and the free supporting documents provided by ISO 14005. 

The Assessment Sheet (on the supporting documents page) provided by ISO is a helpful tool that enables organizations to monitor and record progress through five levels of maturity corresponding to each EMS subclause. An EMS that satisfies the maturity Level 1 (Column 1) through to full maturity at Level 5 (Column 5) meets all the requirements for a particular clause of ISO 14001:2015. 

Costs, Certification and Training  

The Guidance can be downloaded from the ISO website for approximately £130. As the aim of ISO 14005 is to assist SMEs with reaching 14001, there is no separate certification for this standard. However, it is a good reference to turn to for ideas and practical examples on how to make your implementation of ISO 14001 more effective. 

Alternative EMS standards recognised in Wales

For SMEs based in Wales, there are alternatives to the above standards that are administered by national organisations and recognised by the public sector in the procurement process.

Groundwork Green Dragon Environmental Accreditation

The Green Dragon Environmental Accreditation is a comprehensive standard administered by Groundwork, a UKAS accredited inspection organisation. It is awarded to businesses that take action to understand, monitor and control their impacts on the environment. 

What is involved? 

Similar to ISO 14005, the standard operates on a staged based system (Levels 1-5), allowing organisations to join at any stage and progress their EMS in their own time. 

The five levels are: 

Level 1: Commitment to Environmental Management 

Level 2: Understanding environmental responsibilities 

Level 3: Managing environmental impacts 

Level 4: Environmental Management Programme 

Level 5: Continual environmental improvement 

Organisations can choose which level is appropriate to the nature and scale of their activities and upon completion of each level they will receive a certificate. At level 5, the Green Dragon standard is equivalent to ISO 14001. 

Groundwork provides several useful documents on its website to accompany the standard, including an Environmental Review Workbook. There is also a list of organisations across Wales who have achieved Green Dragon accreditation.   

Certification and costs 

To achieve and maintain the Green Dragon Environmental Standard, an annual audit with Groundwork is required. The cost of the audit varies depending on the level, with Level 3 being the most common entry point for organisations and costing.

Green Key – A sustainability standard for the tourism sector ​

Green Key is an international environmental certification programme for the tourism and hospitality industry. It has been awarded to more than 3,200 businesses from across the sector in 65 countries and is open to businesses from across the sector.  

Globally, Green Key is operated by the Foundation for Environmental Education (FEE) who work with national partners on certification. In Wales, the Green Key certificate is managed by Keep Wales Tidy. 

Green Key promotes sustainable practices and recognises businesses that meet specific criteria related to environmental management and sustainability. Criteria are set out over 13 thematic areas including energy and water conservation, waste management, sustainable procurement, and environmental education. 

The FEE has developed criteria and explanatory notes for businesses in six different categories (hotels and resorts, small accommodation, campsites, restaurants, attractions and conference centres).  

In each category, there are ‘imperative’ and ‘guideline’ criteria. For example, creation of a sustainability policy and interaction with stakeholders are imperative criteria, whilst a target to reduce carbon footprint is a guideline criteria.  Each organisation applying for a Green Key certificate must achieve all imperative criteria and then for each subsequent year that they apply they must meet an additional 5% of the guideline criteria.  

In addition to the general benefits of EMS implementation, Keep Wales Tidy highlights that travellers and tourists are increasingly keen to support sustainable businesses and that investment in a Green Key certification is a key market differentiator. Keep Wales Tidy has collated case studies of organisations across Wales who have invested in Green Key. 

Certification and costs  

The application process for certification consists of three parts: 

Sending the application documents 

Receiving on-site audits 

Decision by an independent entity (third-party verification) 

More information about the application process in Wales can be found on the Keep Wales Tidy website. 

Keep Wales Tidy aims to keep certification costs affordable and to ensure Green Key is accessible to all tourism providers. Investment levels therefore vary depending on the size of the business: 

Costs are paid as part of the application prcess and then annually following updated verification (for more information see https://keepwalestidy.cymru/our-work/awards/green-key/).

Seren Scheme

The Seren Scheme is based on BS8555 and follows the same phased approach. Organizations can choose to use the Seren Scheme to achieve other EMS standards such as ISO 14001 or EMAS, or register at a phase that aligns with the nature and scale of their business and remain at that phase. 

The Seren Scheme is applicable to both large and small organizations and places a strong focus on continuous improvement. 

BS8555 is divided into 5 phases: 

  • Stage 1: Leadership, context, and commitment 
  • Stage 2: Ensure compliance 
  • Stage 3: Plan and develop the EMS 
  • Stage 4: Implement the EMS 
  • Stage 5: Check and update the EMS 

As long as organizations pass an annual inspection, they can stay at that particular phase indefinitely and use their EMS to demonstrate their commitment to environmental management to stakeholders and customers. 

The Seren Scheme is administered by a private company called Tarian Inspection Services, which conducts inspections in a friendly, down-to-earth, and highly practical manner. They ensure that companies have a robust Environmental Management System that enhances their credibility, good management, and cost savings. 

Further information can be found at http://www.serenscheme.com/. 

EU’s Eco-Management and Audit Scheme (EMAS)

EMAS is a voluntary environmental management scheme designed by the European Commission. Its overall aim is to enable continuous improvement in the environmental performance of companies, language similar to that in ISO 14001. However, ISO 14001 aims for continual improvement of the system itself hopefully leading to improved environmental performance of the organisation. EMAS requires improved environmental performance of the organisation to be assessed through indicators relating to six core areas – energy efficiency, material efficiency, emissions, water, waste and land use with regards to biodiversity.  

EMAS is more rigorous than ISO 14001, however, ISO 14001 satisfies the EMS component of EMAS requirements.  

Registration with the scheme requires the following steps: 

Conduct a preliminary environmental review – this will be the baseline for improvement 

Adopt an environmental policy and programme in which you involve employees and external stakeholders  

Establish and implement an EMS 

Prepare an environmental statement  

The EMS and environmental statement to be verified and validated by an environmental verifier. 

Recognising the challenges faced by SMEs, EMAS has amended rules for SMEs to encourage participation in the scheme. These include verification every four years (rather than three) and publication of the environmental statement every two years, rather than annually. There is also financial support available in some Member States and a number of tools and guidance to assist SMEs. 

For more information, please see: 

EMAS presentation for organisations  

EMAS Easy Guidance – for SMEs 

EMAS Tools 

Indicative costs for EMAS registration 

In summary…

SMEs increasingly need to demonstrate an understanding of environmental impacts and a strategic approach to minimising climate and environmental impacts to satisfy potential customers and to future proof their business. 

In light of the prevalent tick-box culture in environmental matters, many organisations are seeking broader and more engaging systems, examining the impacts on their staff, communities, and supply chains.  

Regardless of the framework used for environmental, biodiversity, sustainability, or ESG reporting, businesses still need to adhere to similar concepts: focus on leadership and staff ownership, understand impacts, prioritise, plan, communicate, implement, and review. 

If you need further support or advice with any of these activities please reach out to our sustainability advisors.  

Environmental Management Systems: A guide for Welsh SMEs Read More »

Ynni Cymru: Prysor Angling Association – A community-focused energy journey

Prysor Angling Association is a voluntary organisation that manages the fishing on Llyn Trawsfynydd in Gwynedd. Llyn Traws is a trout and pike fishing venue, with a fleet of boats, that regularly hosts international fishing competitions and the Welsh fly-fishing team trials.

The Association also owns a clubhouse on the lake shore, managing it as a community venue and sub-letting to a popular café and fishing tackle shop, both hiring local employees.

Having previously rented the building, the Association bought it in 2024 to help safeguard its future as a community asset. A key driver was the building’s increasingly unsustainable energy bills and the wish to install a more viable energy system that could also deliver community benefit.

Project approach

The chosen option was a solar panel installation, to take advantage of the building’s large south-facing roof, accompanied by battery storage and EV charge points to help address the lack of charging infrastructure in the area.

Funded in part by Ynni Cymru, alongside Parc Cenedlaethol Eryri, Gwynedd Council, and Nuclear Restoration Services, and using £85,000 of its own funds, the Association managed the installation of a Smart Local Energy System or SLES comprising a 49.02kWpeak solar PV system, a 14.4kWh battery energy storage system and four EV charge points (two 60kW rapid and two 22kW fast).

Impact

The renewable energy system has reduced the clubhouse bills from a peak of around £2,000 per month to just the standing charge of c£50 during the summer, freeing up much-needed resources for other activities.  This includes refurbishing the clubhouse and supporting continued employment of three community members to manage the fishing on the reservoir.

The café’s owners have also felt the benefits of the new energy system. The café is thriving, employing a core team as well as seasonal workers, all from the local community. It is popular with those visiting the lake to fish as well as local community visitors and tourists. Through prioritising local seasonal produce, the café is also supporting local suppliers.

Challenges

Installation of the solar panels was straightforward, although it has been more challenging to connect all the SLES’s different component parts due to the number of different bodies that need to be involved – some of which the Association does not have a direct relationship with.

Prysor Angling Association itself has no paid staff and the whole process, from applying for the grant to signing off on the installation and completing reporting, has been done by volunteers, requiring a significant commitment of both time and energy. Committee members were able to bring transferable skills from professional roles to assist with this.

Next steps

This is only one part of the Association’s energy vision. It currently owns 32 fishing boats that are used on the lake and stored in an agricultural shed. Future plans include replacing the current petrol motors on these boats with electric engines that could be powered by additional solar panels located on the shed’s roof. Bi-directional charging will also be explored so that the engines, when not in use, could store energy to charge other devices or provide energy back to the grid.

The Association is also keen to explore the potential to run a subsidised community EV minibus, to help local groups overcome current transport challenges. As Rhys Llywelyn, Chair of the Association, explains, although reducing energy costs was a key driver behind the project, equally important has been “having a vision” of what a long-term community-owned energy asset could provide for the local area.

For Rhys, this has been reinforced by seeing the impact on the local community when the building was forced to close during Covid, and, in contrast, more recently, seeing how much it delivers as an attraction for visitors and locals, especially at its peak season during the summer months.

Rhys’s advice to others wanting to start a similar journey is to keep the end goal in mind but take it one step at a time – bearing in mind that although securing initial funding may be difficult, it then opens the door to other sources.

“Have a vision and then break it down into manageable chunks. Once you get one lot of funding, others tend to fall into place.”  – Rhys Llywelyn, Chair of the Prysor Angling Association

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Ynni Cymru: Menai Science Park – An SME journey towards Net Zero

The Menai Science Park (M-SParc), based on Anglesey, is Wales’ first dedicated science park. Part of Bangor University, it opened in 2019 to foster innovation and entrepreneurship through offering laboratory and office space, business support and links with universities and research institutes.

M-SParc’s aim is to provide a lasting legacy of sustainable economic growth for North  Wales, helping local communities benefit from the low-carbon technologies and infrastructure emerging around them. The approach is rooted in the area’s culture and geography and the park is a key part of its foundational economy.

The vision

In 2021, M-SParc’s Egni team was formed to oversee decarbonisation.  As the understanding and definition of Net Zero expanded however, so too did the team’s remit – moving beyond just low-carbon energy to thinking around engagement, influence and how to involve others.

As Debbie Jones, Low Carbon Innovation Manager and project lead, explains:

“We were giving lots of decarb advice to SMEs and wanted to take the same journey ourselves. Although we have a massive asset in the building, we operate independently of Bangor University and have many of the same challenges as SMEs in terms of budget pressures and keeping things going.  By being transparent in our Net Zero journey, we can help others.”

The team set a goal to not only become the first UK science park to reach Net Zero, but to become an exemplar for other SMEs to follow.

Project goals

Having already trebled the park’s initial solar capacity of 40kW and improved energy efficiency through use of thermal imaging cameras and the ‘Dim the Spark’ behaviour change campaign, M-SParc received an Ynni Cymru grant in 2024 to:

  • Install ten rooftop air source heat pumps (270 kW) to decarbonise the heating and hot water systems
  • Add an additional 35 kW to the solar PV array
  • Enhance the Building Management System (BMS) to improve data granularity and transparency
  • Act as an exemplar to support others on the Net Zero journey

Impact

By April 2025, all installations were complete, including the enhanced BMS to allow more efficient data collection and monitoring. As a result, Scope 1 emissions were brought to zero and Scope 2 emissions were also reduced.

The team are now on track to reach their Net Zero target in advance of 2030 with an 86% reduction achieved to date.

The Park had also lived up to its mission for collaboration and innovation with several aspects of the project developed through tenant collaboration and local labour and supply chains used throughout.

Insights

“The deeper you go into Net Zero, the more data you need.”

As well as optimising M-SParc’s own energy use, the enhanced BMS will also support the wider engagement needed to reach net zero – in this case potentially metering tenant energy use so that efficiencies can be incentivised through direct charging and gamification.

The team also recognised the need for cross-organisation awareness and buy-in from the start of the decarbonisation process. Providing Carbon Literacy training to staff and tenants had been one of the tools employed to create shared understanding of the climate crisis and the need for sustainable energy use.

Finally, despite the scale and ambition of the project, the team has sought to ensure that it does not detract from other sustainability priorities. Initiatives such as such as tree-planting and habitat creation have also been integrated.

Challenges

Inevitably, the journey undertaken by the M-SParc team was not all plain sailing. The challenges included:

  • Location – close proximity to residential areas and the A55 had ruled out wind turbines at an early stage, leading to the focus on solar PV and heat pumps
  • Grid capacity – the original vision of sharing energy with the local village or industrial park next door had to be put on hold due to grid connection cost and waiting times
  • Finance – the size of a loan needed for heat pump installation meant pay-back times that were too challenging for an SME to commit to. The grant was therefore essential and brought additional value in that the group could focus on an integrated system combining renewable energy generation with decarbonised heat, energy storage, zero carbon transport and smart controls, rather than individual technologies in isolation.
  • Timeframe – project delivery took place within a very short timeframe. Having an already-scoped plan, existing procurement frameworks and lean management structures alongside a period of fine weather helped.
  • Technical complexity – this was an ambitious project. The complexity of adding to previous solar arrays and installing heat pumps was helped by the support and know-how of a delivery group, led by Rhodri Daniel, Low Carbon Innovation Officer, that included many M-SParc tenants.

What’s Next?

As hoped, the Net Zero journey has already sparked collaboration with tenants and others in the foundational economy, and the team are actively seeking more. A potential roof-mounted turbine, underground wiring, additional sensors, internship opportunities, and local school engagement are all currently being explored.

Also being considered are:

  • Battery storage – a 1MW battery would enable M-Sparc, and a second building currently under development, to be completely energy self-sufficient
  • At 86% towards Net Zero, can hard-to-abate emissions be offset through biodiversity gains?

Advice

As well as achieving their own target the M-SParc team are also keen to share their learning around decarbonisation and the journey to Net Zero as widely as possible to businesses and communities, sharing impact, pitfalls and successes.

In terms of advice for others undertaking a similar project, the team found that, in their case, preparedness was essential so that plans could be implemented as soon as the funding opportunity was identified.

Although challenging in terms of resources and capacity, Debbie’s advice would be:

“Take the project to the very edge of what’s possible before the grant – and commit to the plan.”

Contact egni@m-sparc.com or visit https://m-sparc.com/grow-with-us/egni/ to find out more.

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We need to keep the focus on the Foundational Economy

The Foundational Economy was one of the vogue economic policy ideas of the fifth Senedd (2016-2021). It had many parents. The works of the Foundational Economy Collective gave it a sound academic basis. A group of politicians – Lee Waters (who later led on the concept in government), Jeremy Miles, Vikki Howells, and the late Hefin David – brought a debate to the Senedd calling for the Welsh Government to develop a strategy to ‘maximise the impact of the Foundational Economy’. Organisations such as the FSB and Wales’ think-tanks also developed their own thoughts on the concept. And organisations across civic life in Wales sought to become a part of a movement that appeared to be the next big idea.

So, what exactly is the Foundational Economy? At Cynnal Cymru we’ve worked with the Welsh Government to help define their response to this question in developing a new ‘Mission Statement’ for their work on the Foundational Economy. The Welsh Government says the following in its Mission Statement:

“The term ‘foundational economy’ refers to the sectors of the economy that provide the goods and services that underpin everyday life. The Welsh Government is focused on the organisations and people in these sectors, as well as the quality and accessibility of the goods and services they provide.

The foundational economy is more than just infrastructure, employment and output. It is also citizens’ sense of control and belonging in their community. These sectors are by their nature immediate to people’s surroundings, and so they are vital social as well as physical infrastructure.”

There are consistent debates about what constitutes the Foundational Economy or a ‘Foundational Economy approach’. Some have argued for a descriptive definition – that is, the Foundational Economy is a description of certain sectors of the economy that underpin everyday life –  for example care and health services, housing, food, and transport. The Welsh Government, for its part, has a strategic focus on the following sectors in the Foundational Economy:

  • care and health services, including social care and childcare
  • management of social housing
  • construction of residential and commercial buildings
  • energy and utilities
  • food
  • high street retail and services
  • tourism
  • public transport

Others have advocated for this to be developed into a more complex ‘analytical’ approach, introducing a ‘three-pillar concept of foundational liveability’, arguing that the liveability concept depends on the alignment of the three pillars of residual income (that is, income left over after spend on foundational goods and services), social infrastructure, and essential services. Whilst less easily communicable than the original concept, the advantage of this approach is that it takes us from the ‘what’ of the Foundational Economy concept to the ‘why’ and ‘how’.

Still more have advocated merger or absorption of the Foundational Economy concept with concepts that have a partial overlap, such as Community Wealth Building.

At Cynnal Cymru, we believe that a continued focus on the Foundational Economy is a welcome one, and we’re pleased to be working with the Welsh Government on this agenda. Here’s why.

Analysis by the Welsh Government finds that the Foundational Economy is a significant part of the Welsh economy. Over 60% of all Welsh headquartered businesses are within foundational sectors, and 51% of employees of Welsh VAT registered businesses are, too. It accounts for 47% of all turnover in Wales.

A geographic analysis of the Foundational Economy in Wales demonstrates the strength of the concept. As the Welsh Government’s Mission Statement states, the “The term ‘foundational economy’ refers to the sectors of the economy that provide the goods and services that underpin everyday life.”

Another way of looking at this could be ‘if you stripped out all non-essential economic activity, what would be left?’ Only that which is necessary to sustain life. The regional analysis of Wales demonstrates this in the real world. Some of the more rural areas see the vast majority (over 70%) of their businesses being placed in the Foundational Economy. Where there is additional economy activity – ‘non-essential’ or tradeable manufacturing and services, for example – the proportion is still high, but lower.

I should state that this economic activity is only ‘non-essential’ in the sense that it does not contribute to the immediate sustenance of life. It is, of course, a vital underpinning to wider quality of life, providing economic growth and good quality jobs.

The Foundational Economy, then, is a solid concept for understanding the economy around us. One Lee Waters quote from an Institute of Welsh Affairs piece stands out – “Of course we should continue to defend our tradable competitive economy, but we must pay more attention to the foundations of our economies”.

For Cynnal Cymru, this is an important framing that underpins the emphasis of governments focusing on the Foundational Economy. The ‘tradeable competitive economy’ can provide good quality jobs, has the potential to bring money into Wales, and can lower poverty rates through these mechanisms. Underpinning the idea of the Foundational Economy is that governments have focused on attracting charismatic sectors (with Artificial Intelligence being the latest focus for policy makers across the world) and paid little attention to the Foundational Economy sectors. A focus on the technologies of the future is important, and Wales should be doing what it can to reap the benefits. But work on these sectors doesn’t have to come at the expense of a focus on the Foundational Economy.

As the Welsh Government analysis shows, we can’t afford to ignore the Foundational Economy. It is too dominant in too many parts of Wales, and the ‘mundanity’ of some of these sectors has caused it to be a less interesting focus for many than charismatic sectors that employ far fewer people.

The working lives of people in the Foundational Economy matter just as much. And often they are defined by low wages, insecure hours, and non-unionised jobs. The Bevan Foundation undertook a research project into Fair Work in the Foundational Economy (with a focus on social care, hospitality, and retail) and found that working conditions were poor. These sectors found ‘a wide prevalence of comparatively low pay… where the majority of workers do not earn a real Living Wage’, ‘above average rates of part-time working’, and ‘low rates of in-work training’.

This makes a focus on the Foundational Economy the perfect partner for the Welsh Government’s ambition to raise levels of Fair Work in Wales – and the Foundational Economy and Fair Work (predominantly through the Living Wage) are the dual focuses of Cynnal Cymru’s Fair Economy team.

The Welsh Government has now published clear objectives in its Foundational Economy work:

  • Identify and support opportunities for more jobs, better jobs, greener jobs and promote fair work, including good pay, representation, security, and opportunity to progress.
  • Increase ‘household liveability’ by facilitating rising wages through promotion schemes such as Real Living Wage, helping increase the affordability of foundational essentials to support universal access to high quality goods and services.
  • Build local supply chains to keep people, skills and wealth in Wales.
  • Contribute towards addressing the climate and nature emergencies.
  • Encourage collaborative innovation and experimentation to improve basic goods and services, especially where these build resilient social infrastructure, such as through cooperative and community-owned projects.

These objectives form the basis for real action on the Foundational Economy. The people working in these sectors deserve to have good working lives, can make a real contribution to sustainability aims, and deliver services that all of us rely on.

Examples of the changes the Foundational Economy approach has made are abundant – and there is more to do. For example, Hywel Dda’s ‘grow your own’ approach to tackling recruitment problems by allowing alternative routes into healthcare employment, focused on building skills in the local community, can be spread to other health boards.

The Foundational Economy team’s direct project support has also created new opportunities. For example, it helped set up the Welsh Veg in Schools Programme. Prior to the project, over 94% of vegetables used in primary schools in Wales were sourced from outside of Wales, often frozen and non-organic. The project, beginning with just one grower, has now grown into a vibrant, multi-stakeholder project. By 2024, 8 growers had actively supplied 14 tonnes of organic Welsh veg for use in school meals. This was across 219 schools in six local authority areas. So far in 2025, the number of growers has expanded to 15, with 12 local authorities engaged. This means that approximately 1 million portions of local, organic veg will be served to school children in Wales as a direct result of the Foundational Economy project.

In housing, up to sixty-four local contractors have been supported to secure accreditations required to deliver retrofit work for homes across Wales. Based on feedback from the contractors, the funding will lead to over three hundred and fifty new jobs through the contractors securing additional work.

This is enabling local businesses to grow through securing more work, and creating new, skilled jobs. Delivery of the housing retrofit can be accelerated through additional contractor capacity, enabling residents to live in warmer, more energy efficient homes. This will lead to greater residual income, enable people to live healthier lives and reduce the climate impact of our housing stock.

The Welsh Government’s Foundational Economy programme has already supported the Living Wage accreditation process for major anchor employers in Wales such as local authorities, and there are exciting signs that this will expand in the future.

From a Living Wage for workers in Wales, to building skills and creating jobs for local people, to healthy, Welsh-grown food on children’s plates. All this and more has all stemmed from the Welsh Government’s focus on the Foundational Economy.

The working lives of people in the Foundational Economy and the services they provide for all of us are worthy of concerted focus. From academic concept to on-the-ground delivery, the Foundational Economy concept has delivered and is set to deliver more. We should take it into the seventh Senedd with pride.

Harry Thompson is Head of Fair Economy at Cynnal Cymru. Cynnal Cymru’s Fair Economy team has a dual focus – spreading the Living Wage across Wales, and supporting the Foundational Economy.

Please visit our resources section for more case studies from Welsh Government Foundational Economy team’s Backing Local Firms Fund.

Please visit the Welsh Government’s website for more information about their approach to the Foundational Economy.

We need to keep the focus on the Foundational Economy Read More »

The potential for the Living Wage in Wales

At Cynnal Cymru, we are getting ourselves ready for Living Wage Week – always one of the busiest times in our Fair Economy team’s calendar.

We’re the Living Wage Foundation’s accreditation partner for Wales – in essence, that means we host Living Wage Wales in-house. Our Fair Economy team supports employers across Wales to become accredited Living Wage Employers. We also work with the Welsh Government on their Foundational Economy agenda – and there is an interlink between these two programmes. One of the Welsh Government’s objectives on the Foundational Economy is to help facilitate rising wages in the ‘foundational’ sectors, including through promoting the real Living Wage.

The Living Wage campaign is one of the most successful campaigns of the past quarter of a century. The campaign for a Living Wage has cross party political support and is a movement of independent businesses, organisations and citizens who believe a hard day’s work deserves a fair day’s pay.

The movement began at a meeting in East London, when the grassroots organisation Citizens UK – the home of community organising – brought together churches, mosques, schools and other local institutions to talk about the issues affecting their communities. One issue came up again and again – low pay.

The Living Wage campaign was launched, and also called on employers to pay their outsourced cleaners, caterers and security guards working a wage that met their everyday needs.

Supporters held rallies and charity music gigs. A big march down the Mile End road called for all staff working in East London hospitals to be paid a Living Wage. These hospitals were among the first employers to join our movement – followed by local schools and big City firms.

In 2011, the UK Living Wage rate was launched. And in 2016, Cynnal Cymru became the accreditation partner in Wales. We have worked with a range of employers and individuals who have been willing to go above and beyond to support the Living Wage in Wales. Cardiff Council, Cardiff Business School, Welsh Government, Citizens UK, and too many other partners to name on our steering groups have donated time and effort to supporting the movement.

So where are we on the Living Wage in Wales, and how much more potential is there in this programme?

For starters – we have nearly 600 accredited Living Wage Employers in Wales now, who collectively employ 160,000 employees. This is rising all the time. We’ve supported leading lights from the private, public, and third sectors to accredit – for example, Admiral, Principality Building Society, and Cardiff, Rhondda Cynon Taf, and Bridgend local authorities.

We often talk about a ‘delivery gap’ in devolution – how do well-meaning frameworks and strategies become on-the-ground delivery? We’re very happy to say that we are playing a role in bridging this gap.

To date, our running total is 21,000 ‘uplifts’ to the real Living Wage directly at the point of accreditation from still-accredited employers – that is, as a direct result of this programme employers have lifted over 21,000 workers off the statutory minimums and on to a wage floor that is based on independent research into the real cost of living. These 21,000 workers receive a pay rise each year, also based on the cost of living.

In times when we talk about a cost of living crisis, this is really important. We know that the costs of essentials such as food and housing have increased significantly over recent years. Living Wage Employers are doing their part to ensure wages keep pace with the cost of living, even in challenging times.

Living Wage Employers don’t just take care of their directly employed workers, either. Our accreditations require in-scope contractors to be paid the real Living Wage. Security and cleaning staff are often outsourced – but our accreditations don’t allow them to be left behind. The movement started with these workers asking for fair pay, and every Living Wage Employer ensures these workers receive the Living Wage, too. This requirement also allows accreditations at major employers like local authorities to have an impact down their supply chains, across the local economy.

The Living Wage movement’s impact is even further than this. Academics at Cardiff Business School have uncovered a phenomenon called the ‘Shadow Living Wage’. This is where major employers peg their minimum pay rates to the real Living Wage, but don’t accredit. They won’t show up in our impact statistics, but it’s not a coincidence the minimum pay rates at supermarkets often very closely mirror the real Living Wage. This is often as a result of trade unions demanding – and winning – the Living Wage as a minimum in negotiations with these employers.

Behind every one of these rises to the Living Wage is a human being and a human story. One typical story that always stays with me is the impact on working parents. One social care worker in Wales told us that he previously had to work multiple jobs – leaving the house before his children had gotten up in the morning, and coming back after they had gone to bed. The introduction of the Living Wage at one of his employers had allowed him to only work one job, and to spend time with his children in the evenings. Another worker in Powys told us that the introduction of the Living Wage had allowed her to save and buy a house, something she would not have otherwise been able to do – transforming her future. There are now more than 21,000 of these stories across Wales.

As proud as we are of this work, there is still so much more to do. The Wellbeing of Wales report published this month found that 33% of workers in Wales are still paid less than a Living Wage.

Welsh Government support is essential to what we do, and has been instrumental in delivering these pay rises for low paid workers. There is still more we can do in the public policy space, though.

The Scottish Government’s ‘Fair Work First’ policy requires everyone in receipt of public sector grants to pay the Living Wage. We should look at emulating this in Wales. After all, there is only so much money to go around – why should we use it supporting low pay, instead of encouraging pay rises for workers?
Similarly, we should examine how they have encouraged the Living Wage through procurement contracts in Scotland. There are now around 4,000 Living Wage Employers in Scotland, and they operate in a very similar devolved context to Wales. We should be looking at the trail they have blazed and be seeking to do the same.

Supporting the Living Wage is something that all of us can do. We have steering groups across Wales – including a Cardiff group and a South West Wales group. We’re looking to support people to establish groups in other areas, too. We have major organisations such as local authorities, universities and the Future Generations Commissioner’s Office represented on these groups. However, we also have bakeries, markets, and other small employers on board – the only real qualification is for you to be enthusiastic about the campaign and be willing to give up your time.

So, as we look towards Living Wage Week – the Living Wage movement in Wales has achieved a huge amount, and Wales is a better place for it. But with a third of people in Wales earning less than a Living Wage, there is so much more to do. Get in touch and be a part of it.

The potential for the Living Wage in Wales Read More »

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