Most SMEs feel unable to deliver climate ambitions due to lack of government support

The survey, conducted by the SME Climate Hub, covered 288 SMEs across 44 countries and more than two-dozen industries.

Published today (10 April), the results show a gap between these business’s climate-related ambitions and their perceived ability to take action to cut emissions.

Only 3% of the businesses polled said that reducing emissions is now less of a priority than it was 12 months ago. For 44%, climate action has moved up the agenda within that timeframe.

Most of the businesses (62%). stated that reducing their climate footprint is a good opportunity to enhance business reputation. Just over half (52%) see taking climate action as a means to differentiate themselves from competitors, while more than one-third believe this is a driver of customer/client retention.

While 52% of those surveyed associate reducing emissions with reducing costs, there is widespread concern over the affordability of low-carbon technology options and process changes due to their upfront costs.

Two-thirds of survey respondents said SMEs need greater financial support to take climate action, and the provision of government incentives is widely regarded as playing a key role in delivering this.

The lack of funding – and of longer-term clarity from policymakers on key initiatives – was found to be a bigger barrier for SMEs seeking to decarbonise than constraints on time and a lack of sustainability skills and knowledge in-house. Indeed, the survey revealed a steep uptick in perceived skills and knowledge over the past year.

One of the businesses polled was Avyanna, an India-based retailer of lifestyle and beauty products. Founder Vishakha Vidhani said: “Substantial initial investments are often needed to implement sustainable initiatives. As we reflect on our climate action journey, we believe clear and straightforward policies and regulations are the most important lever to support small businesses to reach their climate goals.”

India is one of several major economies set to hold a general election this year. Around 40% of the global adult population will be eligible to vote in national elections between January 2024 and January 2025.

Elections can be a particularly challenging time for policy stability.

In the UK, where a general election must be called by January 2025 at the latest, the incumbent Conservative Party has been rolling back on some green policy pledges in a bid to differentiate itself from the opposition and to curry favour in some parts of the private sector. And Labour, the largest opposition party, has scaled back its commitment to green economy spending against the backdrop of the recession.

edie’s own recent survey of 323 sustainability professionals – eight in ten of whom are based in the UK – revealed that political instability is the most significant macro-level challenge facing sustainability in business.