Despite a third of businesses having plans to be net zero, the cost of living crisis has been a setback, according to a recent study from financial solution’s provider, Novuna.
MaruBlue and YouGov conducted the research on behalf of Novuna, which involved surveying over 1,000 decision makers and owners of small businesses across the UK. The study was conducted in order to gain an understanding of their perspectives on sustainability, their approach to achieving net zero, and the measures they are implementing to combat climate change for the upcoming year.
The study revealed while a third of businesses have a set goal to be net zero, almost one in two (45%) don’t actually have a formal plan in place to achieve it. This situation has been worsened in recent years by the pandemic, rising energy prices, and subsequent cost of living crisis, which has forced many businesses to prioritise survival over environmental efforts.
“Many small businesses have struggled to maintain a focus on net zero whilst grappling with the economic ravages of Covid followed by a seismic cost of living crisis” said Geoff Maleham managing director Novuna.
Obstacles to progress
When asked what were the primary hurdles they face in implementing sustainability practices within their organisations, a proportion of the respondents (24%) highlighted budget constraints, followed by the business having more pressing priorities, such as keeping afloat (21%).
Furthermore, many also felt the government could do more to support them, with 19% of respondents saying greater incentives and guidance are necessary.
Another notable factor contributing to this issue is actual knowledge of sustainability. Specifically, 17% of respondents indicated a lack of understanding of sustainability issues, 16% expressed uncertainty about how to achieve sustainability while maintaining profitability, and 14% reported not knowing how to measure the impact of their sustainability efforts.
All in all, the major obstacles were:
- 24% don’t have the budget
- 21% have more pressing priorities
- 19% need more incentive/support from the government
- 17% lack of understanding on the issues
- 16% don’t know how it can be done profitably
- 15% had to pause investment as they deal with rising costs
- 15% don’t have a head of sustainability in the business
- 14% don’t know how to measure their impact of sustainability
Tackling the supply chain
According to the report, small businesses understand the role supply chains play in reaching net zero targets, with over four in five (82%) saying they recognise that ‘greening’ supply chains is an important issue and 78% saying they are already doing so with theirs.
A considerable number (17%) reported they now evaluate the environmental sustainability of prospective partners before entering into business dealings with them. Additionally, 15% said that they would only continue to work with suppliers who demonstrate a commitment to reducing emissions and improving their carbon footprint.
Despite these encouraging figures, it should be noted that 14% of small businesses admit they turn a blind eye to suppliers who ignore green standards.
Greener supply chains are one area where SMEs would like to see more leadership from the wider community: almost a third of businesses (28%) said the government could provide clearer guidelines on how to improve the sustainability of supply chains. The figure rises significantly for certain industries, including the transportation and distribution and hospitality and leisure sectors.
Progress is being made
Altogether, the report suggests that progress is being made. Almost all respondents (90%) reported that the current crisis has forced them to become greener businesses going forward. A third stated that they are exploring alternative “green” options for their day-to-day operations, such as reducing waste, increasing recycling, transitioning to renewable energy sources, encouraging cycling or walking-to-work initiatives, and seeking less carbon-intensive business models.
“Progress on sustainability has been made by the UK’s small business community,” said Sean Jones, head of sales at Novuna, “many recognise that net zero is not something they can afford to neglect. However, to do more, small businesses need support.”
Looking to this year, the study found that the leading sustainability goals for businesses in 2023 were to review the energy consumption of their premises (26%), improve working conditions and contracts for all employees (25%), and transition to more environmental forms of transportation (20%).
Who is Novuna
Novuna Business Finance provides business asset financing to small to medium sized enterprises (SMEs) and to bigger corporations across the UK. Asset financing includes hire purchase, finance lease solutions, stocking, and block discounting provided through brokers, vendor organisations, manufacturers and direct to the business community.
With an asset portfolio of more than £1.6bn, the business is active across multiple sectors from transport and agriculture to construction and manufacturing and was awarded Best Service from an Asset Based Finance Provider at the 2022 Business Moneyfacts Awards.
