The study, which surveyed over 1,000 small business leaders in 2022 and 2023, examined varying perspectives on carbon emission reduction. Foremost among the findings, the research showed that 28% of businesses now say that environmental sustainability and consideration form the foundation of their business, marking an increase from 19% last year. This was found to be particularly the case in the Media and Marketing (40%), and Legal (35%) sectors.

Additionally, the proportion of companies not prioritising carbon reduction efforts shrank to just 10%, down from 14% the previous year.

Increased recognition of business benefits

An encouraging 33% of respondents (up from 23% last year) believed there were significant business benefits to be gained from striving for zero emissions. There was also a marked increase in those acknowledging the need for greater sustainability to secure funding, rising from 13% to 22%. Investor interest as a key motivator saw growth as well, reaching 21% from last year's 11%, while fears of losing business if sustainability goals were not met climbed to 18% from 12%.

This trend was especially pronounced among IT businesses, 41% of which recognised strong business benefits in aiming for zero emissions. In the Transport and Distribution sector, 37% said they needed to do more on this front to secure funding.

Greater awareness among business leaders

The study revealed increasing clarity and understanding among businesses, with 28% now having clear emission reduction targets (up from 20%).

Businesses in the Transport and Distribution sector were notably well-informed, at 46%, while those in the retail sector lagged behind at 23%. Additionally, the study found a correlation between a business's tech-savviness and their sustainability objectives, with 30% of businesses making full use of tech innovation having a grasp on their goals compared to 10% that admit being constrained by technology.

External challenges impede some firms' sustainability goals

Amid challenging inflationary conditions over the past year, a growing number of businesses—29%, up from 23% last year—admitted finding it difficult to juggle sustainability goals with business growth. This was especially true for businesses in the Construction (42%) and Agriculture (47%) sectors.

Overall, one in five businesses (20%) said they felt guilty for not doing enough in terms of sustainability, although this is down slightly from last year (25%).

Previous research by Novuna Business Finance found that 22% of business leaders said prioritising sustainability led to longer-term planning and innovation, while 21% reported cost savings and 17% said it made them more attractive to investors. Key benefits included waste reduction (37%) and improved public image (34%).

Joanna Morris, Head of Marketing and Insight at Novuna Business Finance commented: “In the face of severe headwinds, from inflation to economic uncertainty, it would be fair to assume that priorities become focussed on cost control, side-lining sustainability efforts. We can see here, that despite the various challenges, there is increased awareness, deeper understanding, and an even stronger commitment to sustainability from the business community, not less. Importantly, these business leaders are not merely paying lip service to sustainability but are embedding it into the core of their business strategies.

“For this momentum to continue, there needs to be appropriate support, both from government and the wider business community. Access to capital and a long-term strategy to recuperate costs is crucial. As the cost of going green decreases to a bracket that small business leaders see as ‘affordable’, making environmentally responsible choices becomes easier—especially with the assistance of specialist lenders like Novuna Business Finance."