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Complex Jargon and High Costs Stopping SMEs from Going Green

Many environmental terms have become part of our national lexicon in recent decades, from greenhouse gas emissions and net zero to carbon footprint and decarbonisation.

But while being familiar with the terms is one thing, understanding what they really mean and applying that knowledge practically is quite another, especially for smaller businesses.

According to new research commissioned by the British Business Bank, 54 per cent of small- and medium-sized enterprises (SMEs) believe there is too much complex jargon around going green.

That, in turn, is preventing many firms from actively taking steps to minimise their impact on the environment.


What do SMEs want?

The British Business Bank study found four key issues that need to be addressed to help SMEs’ efforts to go green.

  • 61 per cent of SMEs believe it would be helpful to get more advice and information about how to measure and cut their carbon emissions.
  • 53 per cent want advice on measuring their firm’s carbon footprint.
  • 51 per cent want information to help them see if it makes financial sense to invest in going green.
  • 44 per cent of SMEs don’t know how to get information on cutting carbon emissions nor how to approach commercial or financial opportunities that come with taking this step.

It’s clear from the study that SMEs don’t feel they have the knowledge or the tools they need to invest in making a meaningful difference to their environmental impact.

As a result, many can’t see a clear business case for devoting time or resources to decarbonising their firm.


Going green seen as too costly

According to British Business Bank figures, more than one in three SMEs believe the cost of going green is stopping them from reducing their carbon emissions. Upfront capital costs were raised as one particular concern by a fifth of those polled.

This goes some way towards explaining why just one in 20 SMEs cite reducing their environmental impact as their main priority for this year.

However, this does link back to the issues raised earlier about SMEs not knowing where to get information on decarbonising their businesses, together with the practical steps to be taken to make this affordable and cost-effective.

For example, SMEs could access external finances, such as loans or equity, to support net zero actions – an option taken up by 11 per cent of SMEs so far. This works out to about 700,000 smaller businesses.

British Business Bank figures also show that 22 per cent of SMEs – about 1.3 million firms – are prepared to access external finance in the next five years to support their efforts to go green.

While that’s encouraging, it’s clear that more still needs to be done, particularly as SMEs currently account for 50 per cent of total emissions from UK businesses.

Furthermore, 45 per cent of SMEs say they don’t believe reducing their carbon emissions will make a significant difference to the environment, and 72 per cent think large corporations are primarily responsible for the UK’s business carbon emissions.

All this means that winning the hearts and minds of SME leaders, convincing them it makes good business sense and demonstrating that there’ll be tangible benefits, will be crucial over the coming months and years.

One huge argument in favour of decarbonising is that sustainability is a key issue to consumers, and something that influences many people’s choices regarding which businesses they want to spend their money with.

It follows that an SME, genuinely committed to reducing its environmental impact, could attract new customers and clients and gain a competitive edge over its rivals.

Financial advisers and accountants are an important source of advice for SMEs on options such as accessing external finance, to make sure that going green can be financially sustainable too.

If you’re an SME owner with questions about meeting the cost of decarbonising your business, please don’t hesitate to get in touch.

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