COST OF SUSTAINABILITY TURNING SMALL BUSINESS OWNERS GREEN

• Sustainability is a priority for almost 4 in 5 SME owners, but only 13% are achieving their green goals.
• Despite UK Government committing to achieve net zero by 2050, many of the UK’s 5.5 million small businesses cannot front financial cost of sustainability
• New SME Insights Report from small business insurance provider Simply Business reveals challenges facing the self-employed
• It comes as over a quarter (26%) of small business owners believe that they will be forced to cease trading if the outlook for their business does not improve

Over three quarters (78%) of UK small business owners say that sustainability is at the forefront of their business strategy, but their efforts are being hampered by the cost associated with implementing “green” business infrastructure.

The SME Insights Report, which surveyed over 1000 UK small business owners, found that over half (57%) of small businesses said that financial cost is a drag on their sustainability efforts. Not having enough time (26%), a lack of knowledge or experience (25%) and limited interest in sustainable options from customers (16%) were also cited as affecting their goals.

As small businesses are being forced to compromise environmental practice in favour of keeping costs for services and products affordable for customers, only 13% say that they have been able to achieve their goals.

Taylor Rutter, Contract Carpenter based in Northamptonshire said “Adding a sustainability offering to my work would definitely help with getting more work in the future, especially given that the issue has come into the fore over the past few years.

“As for it being feasible, it would be at quite a cost to upgrade all of my essential kit. If I’m entirely honest, I’m not looking forward to when the time comes to upgrade my van to fully electric for a few reasons – the initial cost, charging points, planning journeys accordingly, future maintenance costs, possibly downsizing the van to accommodate being fully electric.

“For self-employed people like myself, making drastic changes to make the business ‘sustainable’ doesn’t always feel possible. Sustainability feels like a luxury – and in this economic environment, even the basics can sometimes be difficult to cover.”

Sarah Jordan, Owner and Founder of sustainable clothing brand Y.O.U underwear, said “To be honest it’s tough being a small, sustainable business. As a starting point, costs are so much higher across everything you do. Whether it’s sourcing sustainably and ensuring full transparency through your supply chain, paying living wages, or supporting charities as part of your business model (or all of those), each has a very real impact on margins and therefore profitability.

“It often doesn’t feel like a level playing field and with customers feeling the pressure at the moment too, as well as frequently having expectations around price, it’s certainly a tough space to be in. It is, however, also a very motivating one when we get great feedback from customers and see the difference we’re making.”

Beyond sustainability, the report revealed other pressures on the sector. Half (48%) of SME owners believe the rising cost of living is the most glaring challenge facing their business. Over half (63%) say that rising taxes, interest rates, and inflation are eating into profit margins. A quarter (26%) of small business owners believe that they will be forced to cease trading if the outlook for their business does not improve – a potentially detrimental blow to the UK economy.

Alan Thomas, UK CEO at Simply Business commented: “The government has an ambitious climate commitment to cut the UK economy’s greenhouse gas emissions by 2030 and achieve net zero by 2050 but findings from our SME Insights Report shows that SME owners are finding it increasingly difficult to embed more sustainable practices. The UK’s 5.6 million small businesses account for over 99.9% of the firms operating in the country and contribute trillions of pounds a year to the economy. As a result, small businesses will play an integral role in the UK meeting their sustainability goal but they will need government support to do this. If the government is serious about its commitment to its sustainability milestones in 2030 and 2050 it needs to realistically consider small businesses, the role that they play and what ultimately the support they need to get to where they want to be.”