British SMEs moving from ambition to action on sustainability, survey finds

SMEs account for around half of employment - and half of business-related emissions - globally 

The results of a survey of 500 decision-makers at British SMEs, conducted by consultancy Rimm Sustainability, have been published today (21 August).

An ever-increasing top-line focus on environmental sustainability was uncovered, with eight in ten of those polled stating that their organisation is “committed” to the agenda. Seven in ten had already set environmental targets.

These targets are, increasingly, being backed up with delivery plans and progress reports. 54% of those polled say they measure their carbon footprint annually, despite persistent challenges in verifying data internally and the high cost of seeking third-party services for carbon management and reporting.

Half of those polled said they are either already producing annual sustainability reports aligned to a global standard, or are set to do so for the next reporting season.

This uptick in robust reporting comes at a pivotal moment. New global body the International Sustainability Standards Board launched its first two frameworks earlier this summer. The UK Government has pledged to align its own forthcoming national corporate reporting standards with the ISSB’s approach.

In the meantime, one-third (36%) of SME leaders said they are still confused over exactly what they should include in sustainability reports, and how they should set out these reports alongside financial disclosures.

Rimm Sustainability’s founder and chief executive Ravi Chidambaram said clear reporting standards would be a “logical next step” to make high-quality sustainability reporting “achievable” for British SMEs.

The UK’s own new corporate sustainability reporting standards are due next year. They will likely be voluntary at first, with any future mandate likely to target large corporates before SMEs – if an SME-related mandate does ever come.

Challenges and opportunities

As well as looking at reporting, the survey assessed the extent to which SMEs are embedding sustainability considerations into their strategic approach and day-to-day processes.

Promisingly, most businesses saw this as an opportunity to add value than as a burden or source of disruption. Four in ten feared some kind of disruption from going further and faster on environmental impact, while six in ten said that doing so could help improve their reputation as stakeholder needs evolve.

Four in ten recognise that having a strong sustainability approach can help to attract investment and could also help with employee attraction and retention.

Rimm Sustainability’s Chidambaram said: “In recent years we have witnessed a shift in attitudes with widespread recognition of the importance of sustainability amongst the UK’s SMEs.

“This is beneficial to all stakeholders in the value chain, including large corporations, as SMEs are usually present within their own value chains and their non-financial performance could make or break the sustainability metrics of larger corporations.”

Looking at challenges, the survey found that perceptions varied between SMEs that have already set top-line commitments and those that have now.

Of those with commitments, a key concern, cited by 37%, is the risk of making a loss on investment this year. This is of particular concern due to the ongoing cost-of-living crisis.

Of those without commitments, almost one-third say they do not have enough manpower internally to follow through – or enough budget to enlist the help of an external expert.

Related news: New UK Business Climate Hub to support 5.5 million SMEs on net-zero journey