In the wake of COP26 and the strive to create a greener economy, many small business owners have been asking themselves how they can factor in greener initiatives into their business models. In light of this, alternative finance lender Capify has released survey data that reveals how small businesses are feeling about environmental schemes. Over 140 SMEs took part in Capify’s 2021 Environment and Business Survey, with sectors including construction, IT services, professional services, manufacturing, retail, transport and telecommunications. The survey revealed that SMEs feel they are doing ‘everything’ they can to be more climate friendly – but need better financial incentives from the Government to do even more. Key findings: \t1 in 2 SMEs say environmental schemes are not a priority \t1 in 3 SMEs want more clarity on “what we can do” \t2 in 3 SMEs do not have an Environmental, Social, Governance (ESG) policy in place \t1 in 10 SMEs would prioritise greener initiatives if they had more cash in the bank \tSMEs are doing everything in their power to be greener, but the current economic environment has created challenges for green initiatives 1 in 2 SMEs say environmental schemes are not a priority In the wake of world leaders reaching a new agreement to reduce coal power at the COP26 climate summit, small firms have said they are doing everything possible to be more environmentally friendly, but cannot afford to put it at the top of their to-do list. The data revealed that UK SMEs need more Government support to help them be greener, with 50% saying that reducing their CO2 emissions isn’t a priority for the coming year. SME respondents highlighted how they have already stretched themselves to introduce measures to cut their carbon footprint, such as recycling more, reducing waste, creating a paperless workplace and cutting down on unnecessary travel. With cashflow a concern for many small businesses following the pandemic, 60% of SMEs said that better financial incentives from the Government and lower costs for greener solutions are needed to encourage businesses to become more focused on reducing their emissions. 1 in 3 SMEs want more clarity on “what we can do” Around 35% of those responding to Capify’s Environment and Business Survey said they wanted “more understanding about what we can do”, while 33% said it was important to see more of the country’s largest firms leading the way. The challenge of how small businesses can become greener is a topic we’ve previously explored on the Capify blog – check out our guide on how to clean up your business’ environmental footprint for more advice. Nearly 2 in 3 SMEs do not have an Environmental, Social, Governance (ESG) policy in place Over half of participating SMEs expressed they were concerned about their industry’s impact on the environment (55%), and over a third said they had done “everything” they could to be more green (40%), highlighting a good awareness of the impact small businesses have on the environment. Yet despite this concern, nearly 2 in 3 SMEs revealed that they do not have any Environmental, Social, Governance (ESG) policies in place that focus on sustainability or being greener. In fact, over half of the SMEs surveyed said they were not familiar with the term ‘ESG’ (55%). 1 in 10 SMEs would prioritise greener initiatives if they had more cash in the bank The economic climate has put pressure on many small businesses’ cash flow, and as such for many SMEs environmental schemes have fallen down the priority list. Capify’s survey data revealed that just 10% of the SMEs surveyed would prioritise greener initiatives if they had 20% more cash in the bank. When asked what they would spend the extra 20% cash on, 1 in 3 SMEs said their first choice would be to retain the extra funds to support cash flow, while 1 in 3 expressed that they would invest it in more staff and training. A further 16% said it would go to pay off existing debts. It is understandable that small businesses are reluctant to invest in green initiatives given the current climate. However, effective cash flow management can help businesses understand the full picture of their financial health and where funds can be freed up to invest in new things. The right kind of business loan can also help to increase cash flow and allow small businesses to invest in the future – for more advice on how a business loan could help your SME’s cash flow, check out this guide. SMEs are doing everything in their power to be greener, but the current economic environment has created challenges for green initiatives Whilst SMEs are concerned about the impact their business has on the environment and are aware of environmental schemes, the current economic climate has made it difficult for SMEs to invest in this area. Commenting on the survey data, John Rozenbroek, CFO/CCO at Capify said: “Climate change may be the defining issue facing our generation, but for small business owners battling the effects of the pandemic and Brexit, it’s understandable many need to put the immediate needs of their staff and business first. “SMEs who responded to our survey said they’re doing everything in their power to be greener. And while most said they were concerned about their industry’s CO2 footprint, the current economic environment means all of that has to take a backseat for now. “That’s unless the Government can provide support to make those changes for the business owners being hit the hardest. Without vital intervention, it’s difficult to see how this stalemate can be resolved.” Mr Rozenbroek added: “SMEs across so many sectors have proven their resilience on various occasions over the past two years, and it’s crucial for the economic recovery that these businesses continue to grow and succeed." “We still have a long way to go on the road to economic recovery for the small business community, and Capify will continue to strive to help in any way it can.” At Capify we offer a range of small business loans to help support your business through high and low periods. Check to see if you’re eligible for one of our loans with our online eligibility checker. Or, if you’d prefer to talk to a member of our team, we’d be happy to guide you through the process. Give us a call today on 0800 151 0980.