New research has revealed that two million small and medium-sized businesses in the UK are on the path to making their businesses net-zero friendly.
More than a quarter of SMEs have “green intentions” and are currently assessing their sustainability goals. Meanwhile, 1 in 10 SMEs can be described as ‘greening’, and they are doing more in their transformation journey.
Time, investment and understanding stand in the way of greening the UK economy
Despite the fact that many SMEs have begun to explore their role in the nation’s transformation, it is not always easy for them to find the time and money to ensure that the country achieves its ambitious goals. On average, small and medium businesses spend about 15 hours per year thinking about their sustainability approach. While a quarter of SME decision makers consider sustainability a key priority for the next 12 months, it is one of the lowest priority areas for investment.
The index also raised concerns that not all SMEs are aware of the necessary details to make the change. Not many leaders fully understood concepts such as carbon offsetting, net zero, and carbon neutrality.
Small and medium businesses want legislators and large companies to take the lead
Almost two-thirds of SMEs looking to “go green” agree that small businesses play an important role in how the UK tackles climate change, but more people feel the need for strong government legislation to support this.
Seven out of 10 SME decision makers believe that large companies need to address the problem first.
Concerns about the financial sustainability of going green
One in four small and medium-sized businesses believe that sustainable choices can also lead to better business decisions.
However, a similar number fear that implementing a sustainability strategy could pose difficulties for their business, affecting profits and operations. This is especially true for companies located in sectors that will most likely need reform to meet the new green standards, such as manufacturing and agriculture.
However, SME leaders are still keen to “go green”. One in five small businesses is willing to accept a lower profit margin to run their business in a more sustainable way.
Tim Boag, Managing Director of the Business Finance Group at Aldermore commented: “SMEs account for 99% of all private sector business in the UK2 so they will be absolutely pivotal in our transition to net zero. However, our green indicator shows that although The good intentions of SME leaders, however, are significant barriers to making the leap.SMEs demand regulations and guidelines so they can make wise investments and make improvements that really make a difference.
For companies that embrace change, there can be business opportunities. We have seen many of our customers transform or diversify into new and exciting areas that meet the growing demand for environmentally friendly solutions. A recent example of this is where Aldermore provided a loan to a gas energy recovery incinerator waste recycling company, which recovers and reuses incinerator gas.”