Two million (or 40%) of small and medium-sized businesses (SMEs) have started on the road to making their business fit for net zero, Aldermore’s Green SME Index has revealed.
More than a quarter of SMEs had ‘green intentions’ and were currently assessing their sustainability goals (27%).
One in 10 SMEs (9%) were described as ‘greening’ – being further along in the journey to net zero.
On average, SMEs were found to spend about 15 hours a year considering their approach to sustainability.
While 24% of SME decision-makers saw sustainability as a key priority for the next 12 months, it was one of the least prioritised areas for investment, at 17%.
The index raised concerns that not all SMEs were aware of the necessary details to make change.
A significant number of leaders did not fully understand certain concepts, such as carbon offset (27%), net zero (25%) and carbon neutral (22%).
More than two-thirds (69%) of SMEs looking to ‘go green’ agreed that small businesses play a significant role in how the UK tackles climate change, but 72% felt that strong Government legislation needed to be in place to support this.
Almost seven out of 10 SME decision-makers (68%) thought large businesses should tackle the issue first.
One in four SMEs (28%) believed that sustainable choices could lead to better business decisions.
However, 21% feared that implementing a sustainability strategy could pose difficulties for their business, impacting profits and operations.
This was particularly true of businesses in sectors that will mostly need to reform to meet new green standards, such as manufacturing (41%) and agriculture (25%).
Tim Boag, group managing director of business finance at Aldermore, said: “SMEs represent 99% of all private sector businesses in the UK, so they will be absolutely pivotal in our transition to net zero.
“However, our Green Index shows that despite the best intentions of SME leaders there are significant barriers to making the leap.
“SMEs are asking for regulations and guidelines so they can make prudent investments and carry out improvements that will actually make a difference.”
He added: “For businesses that do embrace change, there can be commercial opportunities.
“We’ve seen many of our customers pivot or diversify into exciting new areas which meet the growing demand for greener solutions.
“A recent example is where Aldermore provided a loan to a waste recycling company for a Gas Energy Recovery Incinerator, which recovers and reuses incineration gas.”
