UK SMEs invested an average of £61,250 in sustainability measures during the last 12 months, with many planning investments in areas like product innovation and offsetting over the next year.

Research by finance firm Aldermore found that 53 per cent of SMEs invested in their own sustainability in the last financial year, despite the impact of COVID-19. This represents a significant shift in attitudes – a similar survey by Aldermore in early 2021 found that only 12 per cent saw sustainability as a significant priority.

Priority areas

To-date, around two thirds (65 per cent) of SMEs have invested in workplace recycling schemes, 55 per cent have consciously reduced their business travel and 50 per cent have switched to more sustainable materials.

Average investment in sustainability is set to increase by 27 per cent to £78,392 in the year, with SMEs planning to take more significant measures. Around one in five (21 per cent) of SMEs are considering changing to an eco-friendly product or service, while 12 per cent will invest in carbon offsetting.

When asked how they planned to fund their sustainability investments, 31 per cent of respondents told Aldermore they planned to use business savings, while the majority plan to use finance products. Nearly half (45 per cent) want to work with lenders who have experience funding green projects.

‘Expectation from customers’

Tim Boag, group managing director of business finance at Aldermore, said: “Businesses across the country are now re-evaluating their priorities and looking ahead to how they can innovate in the future, and a particular area of focus for many SME businesses is the responsibility they have for the UK’s ‘green transformation’.

“SMEs are going to see increasing demand and expectation from their customers to deliver more sustainable products and services and will face scrutiny in terms of their own operation’s impact on the environment. It’s hugely encouraging to see that businesses are increasingly willing to address the issue of sustainability and it will be the ingenuity and drive of SME owners that will help make much of the UK’s green transformation possible.”

Net zero confusion

Despite the increasing interest in sustainability as a whole, separate research shows that SMEs are still unsure of what to focus on when it comes to carbon reduction and net zero.

A YouGov survey commissioned by Lloyds Business Bank at the start of 2022 found that 50 per cent of UK SMEs did not know what was meant by the term ‘net zero’, only 12 per cent had calculated their carbon footprint, and 77 per cent were unsure how to reduce their carbon emissions over the next three years.

SMEs in Greater Manchester at an early stage in their carbon reduction journey are encouraged to join GC Business Growth Hub’s fully-funded Journey to Net Zero programme.

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