SMEs delaying sustainability as costs rise

Commissioned by Paragon Bank, the research found that while 80% of SMEs viewed becoming more sustainable as a priority in the next five years only 43% of firms at present considered themselves to have implemented practices to become green.

Only 5% were resistant to adapting greener working practices.

Concerns over understanding and implementing government legislation and the additional costs of acquiring new equipment were as cited reasons for businesses not yet implementing further sustainability measures – with 79% lacking a detailed understanding of how legislation applies.

Almost 50% of SMEs cited equipment costs as a reason for not yet doing so, compared with 31% that considered introducing more sustainable practices as a cost-saving measure.

The research also found that the agriculture and transport businesses were most likely to consider themselves sustainable, with 73% and 48% respectively.

Manufacturing and construction were least likely to do so, with 37% of manufacturing firms considering themselves to have gone green – and only 25% in the construction sector.

Business reputation was recognised by those surveyed as being a key reason for implementing sustainability practices, with 61% citing it as a benefit – with 38% also arguing that doing so would provide them with a competitive advantage.

Commenting on the findings and the availability of financing to SMEs looking to adopt more sustainable practices John Phillipou, Director of SME at Paragon, said: “Making a business environmentally sustainable is a process, not an event. While our research findings demonstrate that a substantial majority of SMEs recognise the benefits to their businesses of becoming greener, there are still significant challenges in front of them if they are to meet their goal.

“For sectors reliant on heavy machinery and vehicles investing in newer, greener models is a costly decision – especially in a time of high-inflation. Supply chain issues have also impacted the availability of new, greener technology and pushed up the price of second-hand green alternatives.

“Financial support is however available for companies seeking to finance purchases to help further their green priorities and looking into those options is an important first step in making that change, and we are keen to support them in doing so.”