Research from Aldermore’s Green SME Index* has revealed that 489,000 UK small and medium-sized businesses (SMEs) qualify as green, meaning they have put formal measurements and commitments in place which will see them transition to sustainability by the government’s net zero 2050 deadlines.

This number has more than doubled in the last year; only 220,000 (4%) were green at the start of 2023.

Overall, two million (42%) SMEs have started on the road to making their business fit for net zero. However, these numbers have remained relatively static in 2023 indicating that while some businesses are moving ahead in their transition, the majority (58%) are not making plans to go green. 

Over a quarter of SMEs have ‘green intentions’ and are currently assessing their sustainability goals (26%). Meanwhile, one in 14 SMEs (7%) could be described as ‘greening’, being further along in the journey towards this transition.

On average, SME leaders spend around 16 hours a year considering their approach to sustainability. This saw leaders investing an estimated total of £83,517; £47,373 in investigating how to be more sustainable and an additional £36,144 on initiatives to green the business.

However, even though many SME decision-makers (68%) see their businesses play a significant role in the fight against climate change, pressing short-term factors such as reducing costs within the cost-of-living crisis are seen as a greater priority (34%).

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SMEs feel that strong government legislation needs to be in place to support businesses as they attempt to tackle climate change (73%).

Nearly seven out of 10 SME decision-makers (67%) think large businesses need to tackle these issues first.

John Carter, commercial director for commercial real estate at Aldermore said: “It’s hugely encouraging to see so many SMEs make the transition to go green in such a short space of time. SMEs make up the majority of private sector businesses in the UK and as such, they will always be at the heart of our national transition to net zero. However, more can be done to help the businesses not currently engaging with the topic, to consider their next steps. SMEs need government incentives to encourage them to make the necessary investments that will make a difference.

“For businesses that do embrace change, there can be commercial opportunities. We’ve seen many of our customers pivot or diversify into exciting new spaces which meet the growing demand for greener solutions.

“Aldermore has worked closely with Citu Group for the last two years – a Yorkshire based low carbon property developer that is tackling the climate emergency by building much needed energy-efficient homes.”

Research conducted by Opinium on behalf of Aldermore between 24 October – 08 November 2023 of 1,000 SME Senior Decision Makers.

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