There is a failing right at the heart of the government’s environmental agenda. Despite grand initiatives, glossy literature and an ever-increasing legislative burden, SMEs remain either blissfully unaware of their responsibilities or unmoved by environmental considerations. Most regard them as an irrelevance, and it’s hard to blame them. Keeping a small business afloat is enough of a challenge without taking the environment into account.

According to a report by Kingston University, there is a “major problem with the government’s fundamental faith in the market for solving environmental problems and SME owner-managers have little incentive to improve environmental performance while they remain unconvinced that
environmental management is good for business”. This conclusion is directly at odds with Environment Agency report Greener Business is Good Business. Either government is not getting its message across or small businesses aren’t listening.
Fearing loss of competitiveness
The report identifies several reasons why an emphasis on voluntary environmental action is unlikely to have an effect on the environmental practises of SMEs:

  • Owner-managers fear a loss of competitiveness and may not be convinced that embracing EMS is a good way of reducing costs or winning customers.
  • Lack of resources: Many owner-managers have found that they do not have the capacity to make improvements.
  • Small firm owners may not feel that there is not enough time in their day to pursue environmental measures that are not a natural byproduct of core management activities.

A policy emphasis on voluntary action encourages the environment to be seen as a peripheral issue so it is not seen as a central business concern for SMEs. Small firms are not subject to the same stakeholder pressure for
environmental management as large corporations, so policy strategies which emphasise voluntary environmental action without the threat of future legal action tend to reinforce the idea that the environment is of little importance.
Kingston researcher Andrea Revell has found that one of the main barriers to greening small businesses is attitudinal. “Many small businesses see their impact as negligible and don’t see themselves as responsible for environmental problems,” she says, pointing to the fact that many SMEs don’t see the business case for adopting environmental policies: “They don’t have a financial impetus. They see action as costly in both time and money and worry they will lose competitiveness. If the shop down the road hasn’t adopted green policies while another chooses to adopt
environmentally friendly practices and internalise the associated costs – which can’t be passed on to the customer – then there is a significant loss of competitive edge.”

Supply signals

Furthermore, according to Revell, the supply chain is not signalling to the small business that there is any benefit to going green. “They don’t think that this will win them customers or suppliers, despite ISO 14001.” Revell has found that the only motivation for small businesses to adopt environmental policies is their own personal values. “Small businesses tend to be very short-term in their outlook, so they are not interested in long payback periods like investing in energy efficient equipment,” she says.

There are further problems identified both by Revell and by Faye Clamp, policy development officer for the environment at the Federation of Small Businesses. For example, SMEs tend to be poorly informed of their regulatory obligations. Recent changes to hazardous waste legislation highlighted a failure by government to communicate with SMEs. But there is a wider problem says Clamp: “The government has yet to communicate the wider benefits of adopting environmental policies. The message is not getting out there that there are potential cost savings to be made.”

Lack of funding

Clamp suggests that this is due to lack of funding. “There isn’t enough high profile promotion of the fact that
environmental measures are also beneficial,” she says. “We need to have a comprehensive government programme that focuses on savings rather than environmental issues.”

Clamp also points to the lack of incentives for small businesses to go green. She suggests an incentive for small businesses to recycle. “These issues have been discussed at length with the Treasury. It’s the old carrot and stick approach – and there needs to be more carrot,” she says.
The message is clear. Government has a lot more work to do to encourage small businesses to take the environment seriously. At the moment they don’t. This is due to both lack of communication and lack of financial incentives.

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie