UK SMEs call for green leadership amid policy changes

In anticipation of the upcoming UK General Election, a new report highlights the pressing demand for clarity among small businesses regarding the next Government’s stance on sustainability.

Amidst a landscape of policy uncertainty, small business owners are calling for stronger leadership and clearer guidance on a range of green policy initiatives.

The Report by Novuna Business Finance – The ‘Small Business Perspective on Sustainability – The Mandate for Support from a new UK Government’ – provides insightful analysis of the impact of recent policy reversals by the UK Government on crucial green initiatives, including delays in phasing out petrol and diesel cars and shifts in renewable energy commitments. The report also looks in detail into the concerns among small businesses ranging from lack of access to grants and funding for green projects and a perceived lack of prioritisation of environmental issues by the major UK political parties.

The key issues highlighted in the report include:

  • The impact of policy U-turns
  • The call for better leadership and direction from a new government
  • The need for better financial support and green incentives
  • Levelling up the regional disparities and industry specific challenges
  • The demand for greater education and awareness initiatives

The report evidences that a significant number of small business transformation on sustainability has been underway over the last two years, but this enthusiasm has been dampened by recent policy U-turns from the main political parties. 

In February 2022, 58% of UK small businesses said they were working on sustainability initiatives for the year ahead. By February 2024 this figured had soared to 92% with the average small business working on 3.2 sustainability initiatives concurrently and 20% of enterprises working on five or more projects.

Looking at the sustainability project areas where small businesses were looking to make improvements in 2024, the most common initiatives comprised of reviewing energy usage of the premises (31%), having a positive environmental impact on my immediate community (29%), improving policies towards packaging and waste/recycling for products and services (28%) and switching to greener forms of transport (cycling schemes, electric vehicles, public transport).

Despite these positive trends, the report also highlights the challenges posed by the recent policy U-turns. Many small businesses now feel less confident about obtaining grants for funding for green initiatives (23%) and one in five small businesses (21%) said they will now look to adopt green and sustainable measures at a slower pace. In addition, 14% of respondents said green initiatives have become less of a priority to the business if it's clearly not a priority for the government and 12% saying more directly, “If the government doesn't take it seriously, why should I.”

With a General Election on the horizon, small businesses were also asked what green policies they hoped for from a new government. Amongst the top responses there was strong support for a new Government investing more in renewable power so the vast majority of the UK's electricity is generated from renewables by 2030 (73%) and support also for a substantial investment into the green economy (72%).

Beyond this a lot of the top answers related to things small businesses could see: planting trees, tacking waste and littering, supporting farms, working with schools and doing more to support local authorities. Many small businesses have a close connection with their immediate community even if their client base is national or their online reach is global. Small businesses often hire locally, invest in local community projects and them seeing positive green change in their community probably inspires them to do more themselves.

The top 10 policies small businesses would like to see from a new Government

UKSMB gov pol shift

Jo Morris, Head of Insight at Novuna Business Finance, commented: “Our commitment to conducting ongoing research on sustainability and related topics is borne out of our interest in learning more about small business viewpoints on these issues. Too often the big debate circles around big brands and the big influencers and there is an urgent need to better understand the small business community’s views on the key issues.

“Novuna Business Finance takes seriously its responsibilities to support society and to making a positive and sustainable difference to people’s lives. The fight against climate change – and the push towards a more sustainable world – are tasks that involve everyone working together. Everyone needs to have their voice heard and to have their positive work recognised. We hope the insight shared in our new report contributes towards a better understanding of small businesses, the crucial role they play in supporting sustainability and the support they need to achieve more.”