Study shows UK SMEs struggle with sustainability and decarbonisation, posing risk to carbon-free future

A new study has revealed that nearly half of all UK small and medium-sized enterprises (SMEs) do not have anybody leading their sustainability efforts, and almost four million do not have a strategy to decarbonise their operations.

The study, conducted by Rimm Sustainability, a global B2B sustainability solutions provider, surveyed 150 SME executives from various roles such as CEOs, CFOs, CSOs and CMOs, and its objective was to better understand the situation of UK businesses on the path to achieving net zero.

Rimm Sustainability's report found out that SMEs, which account for 99 per cent of all businesses in the UK, may hold the key to unlocking a carbon-free future for the country. The report revealed that nearly two-thirds (63%) do not have a sustainability plan in place, and less than half (43%) have not sought more sustainable practices.

Only a quarter (19%), according to the report, have a c-suite or board-level executive entrusted with spearheading their sustainability efforts, and less than half of the surveyed SMEs (43%) have actively sought out more sustainable practices.

Ravi Chidambaram, Chief Executive Officer and Founder of Rimm Sustainability pointed out the importance of proactive action by businesses, stating that without it, the UK will not reach its collective targets. He noted that while the largest enterprises and polluters definitely have the most work to do, small businesses, which make up 5.5 million in the UK, must also play a role.

The founder of Rimm Sustainability expressed concern that 45 per cent of UK SME leaders have still not tasked anyone in their business with improving sustainability, or have even taken the lead themselves.

When questioned about existing net zero strategies, only a quarter (26%), or 1.4 million people, have a complete climate reduction plan in place, while the remaining six per cent have a plan but it is only in draft form. Despite this, the majority (77%) of questioned SMEs stated that decreasing their company's environmental effects is a top priority.

In terms of self-assessment on SMEs' progress to net zero on a scale of one to 10, more than half (64%) rated themselves above five, with 36 per cent rating their progress between six and 10. While net-zero plans are few and far between, SMEs appear to be implementing sustainable practices, with almost all surveyed SMEs reporting that they had researched ways to reduce their wastage and had gone on to implement a solution, with 69 per cent reporting that their solution was successful. Additionally, 51 per cent also claimed to have successfully reduced their energy consumption, and more than one in three (35%) claimed to have successfully reduced their water consumption.

Despite the positive practices, more than half (59%) of respondents said they are unsure of what is required to achieve net zero, with one in six (14%) saying a lack of information is hindering them from moving forward with their sustainability agendas in general.

Similarly, the report found that half of SMEs cited a lack of finance as the key impediment to increasing sustainability, a frequent topic given present economic difficulties. Among those implementing net zero initiatives, the report found that 19 per cent said their efforts had reported no quantifiable impact on their sales and revenue, while 11 per cent said their costs and overheads had actually increased.

Finally, one-third (33%) of SMEs blamed their stalled net zero strategy on a lack of time, and nearly a quarter (25%) claim they have no plans to become greener because it is neither a regulatory nor a legal obligation.

Chidambaram stressed that while business trading conditions are difficult, improving business practices can save money while also making companies more appealing to potential customers. The advantages of green practices outweigh all other considerations, he added.

SME leaders, according to the CEO and Founder of Rimms Sustainability, face a plethora of challenges, but he encouraged businesses to think smart and collaborate to measure, report, and improve on sustainability is simple. He stated that there are currently several low-cost and even free options to assess and optimise a business's carbon footprint, as well as more advanced technologies that use artificial intelligence (AI) and learning materials. Chidambaram concluded, saying that leaders of SMEs have few excuses not to embrace a greener future.

The report stressed that there is a need for increased support and guidance for SMEs on their path to sustainability. It proposed that the government provide additional cash and tax benefits to SMEs who invest in sustainability, as well as collaborate with industry associations to produce more resources and tools to assist SMEs in measuring and reducing their emissions.