Small and medium-sized enterprises (SMEs) are falling behind in the race to achieve net zero emissions, according to a new survey by lending provider Simply Asset Finance.
The research, released just days after the conclusion of COP28, polled 796 SME business leaders across the UK and revealed that nearly a third (32%) have no net zero plan in place.
The survey identified several reasons for SMEs’ reluctance to prioritise net zero initiatives. Over two-thirds (63%) of respondents were worried about the financial implications, while more than half (58%) felt that they lacked the necessary support to implement the necessary changes.
“The impact of escalating costs on small businesses creates a significant dilemma as they try to balance the growing financial pressure with the desire to grow and future-proof their business,” said Mike Randall, CEO at Simply Asset Finance.
“The investment required to reach net zero is something they are incredibly conscious of, but it was acknowledged as a significant undertaking pre-pandemic, let alone now. The will is there, but unfortunately the means are often not.”
Despite initiatives like the recently launched UK Business Climate Hub, which aims to assist UK businesses in addressing climate change, one in ten (11%) SMEs still do not know where to start when it comes to implementing a net zero plan.
When asked about the government policies or initiatives that would have the most significant impact on their businesses, a fifth (22%) of respondents agreed that more support for achieving net zero or other ESG goals would be crucial.
Read next: A simple decarbonisation strategy for SMEs
A global shift
Despite financial constraints, a small percentage (13%) of SMEs are committed to incorporating ESG principles into their operations. However, the research found this is primarily due to demands from their partners or suppliers (21%).
SMEs constitute 99% of all businesses in the UK, making up a substantial portion of the country’s business landscape. While new regulations like the CSRD (Corporate Sustainability Reporting Directive) primarily impact large EU-operating businesses, many smaller organisations within their supply chains are now anticipated to follow suit with their sustainability efforts in order to maintain competitiveness.
“A net zero shift should not just become achievable for businesses across the UK, but also beneficial to their business models and balance sheets. It’s a competitive advantage, not an unaffordable burden,” said Randall.
Want to learn more about how SME’s can implement sustainability into their businesses, don’t miss our SME: Sustainability Handbook.
