Perceived costs prevent SMEs implementing environmental policies

The survey by the Forum of Private Business (FPB), which questioned business owners on its own Environmental Member Panel, found that, while slightly more than half (56 per cent) of small businesses have informal environmental policies in place, just 22 per cent have formalised their environmental practices.

The main two barriers to implementing energy-efficiency processes highlighted by the respondents were the costs involved and – a particular issue for SMEs – because businesses in rented premises see no reason to pay for improvements that benefit their landlords.

Other barriers cited by the respondents include: planning issues; time constraints; the payback period on green investment; lack of support; lack of information on technology; and lack of knowledge about where to access grants and information.

“When small businesses are considering implementing environmentally-friendly policies, the will is certainly there but it is often thwarted by the perception of steep costs and a lack of information and support,” said the FPB’s policy representative, Matt Goodman.

Although he added that: “It is important to emphasise that measures to reduce carbon emissions can mean savings on the bottom line,” this is a point that most SMEs seem not to have taken on board. 

Even amongst the most environmentally-proactive business owners questioned, only 48 per cent said they were pursuing environmental strategies to save money. The same proportion said they were doing so because it made ‘business sense’. 

Far more said they were implementing environmental policies because it is ‘the right thing to do’ (83 per cent) or for reputational reasons (57 per cent).

Incentives suggested by panel members to encourage business owners to put in place environmental measures were largely financial, with 30 per cent calling more funding or more easily accessible grants.

Among the environmental solutions SMEs thought likely to be most effective, were VAT reductions for environmentally friendly investments; enhanced capital allowances for energy efficient solutions; and more grants for SMES.

But they also said that simplification – of grant schemes and of regulation – would encourage more SMEs to adopt environmental policies. Industry-specific guidance and better support and advice would also be welcomed, they suggested.

Taxation and more regulation to force businesses to improve environmental practices, on the other hand, were thought unlikely to work.

Many are concerned that the environment is being used as an excuse to increase tax and fear that environmental regulation and ‘green taxes’ could make the UK less competitive.

Rather than spending money on large-scale awareness campaigns, there was a general feeling that the Government should concentrate on working to help business owners take smaller steps. 

However, the business owners acknowledged that they also had to take responsibiity for things like switching off lights and machinery.

The results of the FPB’s panel research were provided to the Department of Energy and Climate Change (DECC) at the latest external stakeholders meeting for its Small Emitters Project today. The project is investigating the part played by small businesses in meeting the UK’s carbon reduction commitments.

The FPB is a not-for-profit organisation representing thousands of small businesses – including retail, service providers and manufacturing companies – across the UK.