The ‘green’ transition is stalling for small and medium enterprises (SMEs), despite reporting regulations on the horizon and potential cost-savings, research from Aldermore’s latest ‘Green’ SME Index has revealed.
With new UK Sustainability Reporting Standards set to come into force from 2026 for some businesses, the new research revealed a worrying stagnation in climate progress.
Finding revealed that there is a growing ‘net zero divide’ in the SME community.
Just 13% of small businesses can be classified as ‘green’, meaning they’ve implemented formal measurements and made commitments which will see them transition to net zero emissions by 2050.
This figure has not improved from Aldermore’s survey in 2024, raising red flags about the UK’s ‘green’ transition.
While one in four SME leaders are assessing their goals (24%), the majority of SMEs remained in the early stages or are actively disengaged.
82% said sustainability requirements feel like an active barrier to their business and many 58% have never heard of Scope 1, 2 and 3, key pillars of future reporting frameworks.
Despite these fears, there can be an economic upside for many businesses.
SMEs estimated they could generate an average of £52,198 in additional annual income by becoming more sustainable.
But they many have spent just £5,566 investigating in ‘greener’ practices and £23,715 implementing them.
Lauren Pamma, head of energy and infrastructure at Aldermore, said: “Our research shows genuine ambition among SMEs to decarbonise, but a lack of knowledge, resource and access to capital is holding many back.
“With reporting deadlines approaching, now is the time for government, industry and finance partners to step up their support.
“By closing the skills gap and providing targeted funding, we can help SMEs unlock the substantial growth, energy security and cost‑savings that sustainability delivers.”
She added: “At Aldermore, we’re committed to helping UK businesses finance their transition to net zero – in fact, we recently provided a £25m funding package to one of the fastest growing EV charging networks in the UK, Osprey Charging Network, to accelerate the roll out of its super-fast EV charging hubs.
“Whether you’re installing clean‑energy technologies or developing renewable infrastructure, we’ll work with you to design funding solutions that fit your sustainability goals.”
