Why small businesses need government support to be sustainable [REPORT]

In a new report by Enterprise Nation, Aviva and the Enterprise Trust, only one in five small and medium-sized businesses say they will be taking steps to become more sustainable. This is despite the increasingly high level of concern over environmental issues and the government's drive to reach net zero over the coming decades.

The report, titled Green ambition: Unlocking sustainability opportunities for small businesses, has found that while most small business owners do want their businesses to make a difference, only a small percentage plan to adopt new measures around environment, social and governance (ESG) and corporate social responsibility (CSR), or keep tabs on their carbon footprint and impact on the environment.

According to the British Business Bank, small and medium-sized enterprises (SMEs) are responsible for a third of the UK's emissions. But the report, which surveyed more than 1,000 SMEs across the UK, found many have barely started the process of addressing the environmental concerns within their businesses.

For example, only 29% were aware of the Landfill Tax, while fewer than 20% of business owners understand or had heard of emissions trading, which is set to be an important element of the government’s net zero policy.

Specific sectors were also in the dark about key policies affecting them directly. Only 13% of construction, home repairs and improvement firms had heard of the government's Heat and Buildings Strategy, which sets out the UK’s approach to 'decarbonising' 19 million homes and introducing renewable energy.

Consequently, the research identifies a need for the government to provide more support for entrepreneurs to put such green measures in place. This might be through:

• communicating its climate policies more clearly

• offering financial rewards for taking environmental action

• celebrating those businesses that are assisting the effort to reach net zero goals

Indeed, if financial support or grants were available, half of the small firms surveyed said they would adopt environmentally friendly business models and solutions.

Emma Jones, founder of Enterprise Nation, said: "At the moment, sustainability and environmentalism are high on everyone's agendas, including those of SMEs. But translating that into accessible, practical and affordable actions requires a major shift.

"This report shows that while there is no shortage of enthusiasm, there's also very little real action either. Small firms face dramatically different challenges to large corporates, and we must develop a simple blueprint and offer clear advice to unlock innovation and hit climate change targets."

Adam Winslow, CEO of Aviva UK & Ireland General Insurance, said: "We must rethink the way we support small firms to adopt climate change measures. Their ingenuity, enterprise and innovation will be crucial in meeting the climate challenge, allowing us to meet the needs of the future without compromising the standards of living we have achieved in the present.

"Small businesses play a pivotal role in the economic health and resilience of communities across the UK and it's crucial that they are given the right support to aid their transition to more sustainable business practices."

Helen Booth, director of enterprise charity The Enterprise Trust, said: "There's clear evidence in this report that one of the most effective ways to engage small firms and encourage them to adopt greener business models is to stress the opportunities for growth it offers and to consider introducing financial incentives such as grants or loans.

"It might seem like an achingly obvious thing to point out, but if we’re serious about leading the way in the global transition to net zero, and seeing the benefits of that in the wider economy, we must ensure entrepreneurs feel more supported and that they have time to create the skills they need to make these changes doable."

Download the 'Green ambition' report

Read the new small business sustainability report by Enterprise Nation, Aviva and The Enterprise Trust.