British SMEs need more Government support on sustainability, surveys find

One survey, from financial services firm Novuna, polled 1,228 decision-makers at small businesses from a range of UK locations and business sectors. 80% of those surveyed said they do not believe that the national government or local authorities are doing enough to champion the need for climate action from small businesses.

While most of the companies surveyed (85%) said they are “working hard” to get environmental sustainability higher on the agenda, less than one-fifth said the national government had an influence on their ability to evaluate steps to take to cut waste, energy and emissions. There was a lack of guidance and support, the survey revealed, on implementing changes like improving packaging sustainability, reducing business travel or implementing car-sharing schemes.

Survey respondents also said they wanted more guidance on engaging suppliers, given that many businesses will see the bulk of their overall emissions footprint sitting upstream. Almost one-third (28%) of respondents said the Government would do well to publish guidelines on supplier engagement on decarbonisation. This sentiment was strongest in the transport and distribution sector, of the sectors represented in the research.

The UK Government has already published guidance on how SMEs can and should measure and report emissions, following a call to action from then-Prime Minister Boris Johnson in May 2021.

“Successive Governments have done a great deal to support net-zero and the green agenda but, despite the current and immediate economic challenges, now is the time to maintain a focus on the climate commitments made in recent years,” said Novuna Business Finance’s head of insight Joanna Morris. “The global debate on climate change often focuses on major businesses and their role as change agents. Yet it is clear from our research that the small business community has a vital role to play.”

An ‘overlooked’ part of the economy?

Another similar report from Sage and the International Chamber of Commerce (ICC) this week quantifies the impact of SMEs on the British economy and the natural environment.

The SME Climate Report states that SMEs account for 50% of gross value added to GDP and that their operations are responsible for 44% of national non-household emissions. As such, they have a key role to play in delivering a just transition to net-zero.

More than half (53%) of the 2,000 businesses polled for the report stated that environmental sustainability is either “a priority in”, or “central to”, their strategy and operations. The most common steps businesses were taking were reducing waste material and improving energy efficiency.

However, nine out of 10 of the businesses said they face barriers to taking climate action. Financial constraints and difficulty finding the right solutions were found to be the most common barriers.

The report sets out a string of recommendations for policymakers that would help to tackle these barriers. It calls for a “comprehensive suite of fiscal interventions” so businesses can invest in the solutions they need to decarbonise, for example. A fiscal statement is due on 17 November.

Also recommended by Sage and the ICC are measures to ensure that environmental reporting requirements are not overly complex or costly and that there are tools to help SMEs report accordingly. For example, the UK Government mandated climate risk disclosures from large businesses in April and will expand the remit down to smaller firms in the coming years. Another recommendation is the provision of free training and advice on measuring and reporting emissions for SMEs, as well as the data needed to do so.

“Considering the significant role they play in our economies – and our environment — the Government has a responsibility to level the playing field for SMEs in the race to a net-zero society,” argued Sage’s executive vice president for sustainability and foundation Elisa Moscolin.