Nine in ten small businesses fall short on sustainability

Around nine in 10 small business owners (89%) admit they could be doing more on sustainability - with lack of knowledge on the key issues and financial considerations being the main factors holding them back.

The new research from Novuna Business Finance found that small businesses in manufacturing (95%), construction (94%), retail (94%) and hospitality (94%) almost universally acknowledged they could be doing more on sustainability - as did young businesses that had been trading for less than two years (94%, compared to 85% of enterprises that had been for 10 years or more).

The national poll of 1,027 small business leaders revealed that whilst 12% of respondents said the geo-political uncertainty of world events had diverted their attention in recent months - for most small businesses, education and money were the biggest barriers to doing more on sustainability.

The sustainability knowledge gap revealed

Nationally, 17% of small businesses cited a lack of understanding of what sustainability entailed, 14% said they didn't know how to measure its business impact - and 12% said they didn't know where to turn for trusted advice on the subject. Linked to these two factors, 15% of business leaders said their small business lacked a Head of Sustainability to coordinate a programme of activity - and, perhaps a consequence of this, 9% reported disinterest on sustainability issues from their staff members. Alarmingly, almost one in 10 respondents (9%) thought it was too early to invest in a sustainability programme - despite recent alarm bells ringing loudly on the climate emergency.

Financial considerations: Investment and business impact

For many small businesses surveyed, finance and cashflow were the biggest challenges to doing more on sustainability. Overall, 24% of small business leaders said they didn't have the budget to do more on sustainability. In addition, 16% said they did not know how they could do sustainability profitably and 13% said it didn't make economic sense. In addition, 15% of enterprises reported that the investment they had planned to make on sustainability projects had been put on hold, as they reacted to the immediate impact of the rising costs and its impact on the supply chain.

• Manufacturing - this was the sector where small businesses had been notably impacted by geo-political uncertainty (18%) and were also most likely to say they had had put on hold sustainability plans, whilst dealing with the immediate impact of rising supply chain costs (24%). These enterprises were also most likely to call on the Government to do more incentivise and support small businesses on sustainability projects (29%).

• Finance/Accounting and Media - for sectors known for compliance and governance, it was a surprise that these small businesses were least likely to have a Head of Sustainability in place (20% and 24% respectively) - and, as result, to least know how to measure the positive impact of being a sustainable business (19% and 21%).

• IT, Transport and Retail - small business owners in these sectors were, equally, most likely to be baffled on how to do sustainability profitably (20%) - whilst, worryingly, small businesses in the hospitality sector were most likely to say sustainability didn't make economic sense (18%).

Regional highlights

• Small businesses in North East (95%) and North West (92%) were most likely to admit they could do more on sustainability - with Scotland and Wales the least (85% and 88%).

• In Scotland and Wales, small business owners were most likely to say they simply didn't have the budget to do more on sustainability (40% and 31% respectively) and they were also most likely to say they didn't know how to do sustainability profitably (24% and 23%).

• London had the highest level of disinterest in sustainability from staff members (12%) - and it was also the region where small businesses were most likely to not have a Head of Sustainability in the business (19%).

• In the North East, small businesses were most likely to say they had more pressing priorities to keep the business afloat (29%) and, once again, this was linked with businesses being most likely to call on the Government to do more to help them (29%).

• In Yorkshire/Humber, small businesses were most likely to say they did not know enough about sustainability (23%) and this was linked with them also being the most likely to believe it was too early for their business to invest in sustainability (15%).

Jo Morris, Head of Insight at Novuna Business Finance commented: "Whilst today's challenging economic context is an immediate concern for many small businesses, the climate crisis is a global issue that demands immediate attention from everyone. Many small businesses could be doing more on sustainability, but it is becoming clear from our new research that there is a sizeable knowledge gap that is holding enterprises back. Some enterprises don't know how to measure the impact of being sustainable, others can't see how it can make real business sense - and there is confusion on who to turn to for good advice."

"At Novuna Business Finance, sustainability is at the heart of our business and this new research allows us to better understand how small businesses see the issues - what they are doing well, when it comes to sustainability, and where the challenges are that need to be tackled. From our insight, we will resolve to put together remedial solutions to help small businesses to fulfil their true potential as sustainable enterprises and to grow in a fashion that supports the planet, their community and their bottom line."

Notes to editors

The research was conducted by MaruBlue among a representative sample of 1,027 small business decision makers in April 2022.

Sustainability statement

Novuna Business Finance recognises its responsibilities to support society, communities, and it is committed to making a positive and sustainable difference to people’s lives. The business focuses on markets where it can contribute towards the UN's Sustainable Development Goals and provide innovative solutions that require high service levels and a commitment to customer care. The aim is to work with customers to make them aware of more sustainable asset choices, and to work with suppliers, where possible, to help identify more sustainable solutions. Novuna Business Finance is committed to supporting society and the communities in which it operates to make a sustainable difference.