The government-backed Willow Review has released its report into the economic potential of sustainability practices for the UK’s 5.5 million SMEs (Small and Medium Enterprises), a group who collectively represent 99% of the nation’s businesses.
Launched last November, the Review was jointly chaired by Gareth Thomas, the Minister for Small Business; Nick Stace, Head of Social Purpose and Sustainable Finance for Barclays UK; and Michelle Ovens, Founder of Small Business Britain.
The review is important given that, despite SMEs having been found to account for approximately 50% of all business-driven emissions, uptake of sustainability initiatives among this group remains limited due to uncertainty about the financial advantages, and concerns about high costs[i]. According to data released last year in a separate study by Small Business Britain and BT, only 24% of small businesses recognise the financial benefits of sustainability[ii]. Yet, an overwhelming majority – more than 80% – said they want to improve their sustainability credentials, despite just one in four believing that reducing carbon emissions represents an opportunity for business growth[iii].
Now, in a positive sign, the findings released from the Willow Review show that there is a significant green growth opportunity for the UK’s small businesses, and those engaging in sustainability measures are already reaping the rewards. It found that of those employing sustainability measures, 67% of SMEs reported reduced operational costs (e.g., energy, waste, materials). Further, 52% said they attracted new customers due to their sustainability commitments, and 35% saw improved customer loyalty[iv].
Perhaps unsurprisingly, when asked what the motivation was to enact sustainability measures, over half (56%) of SMEs cited cost savings. To achieve sustainability goals, 57% said that they have reduced business travel, 60% have introduced waste reduction measures, and 65% are using sustainable materials in products or services[v].
Despite these advantages, many SMEs struggle to act due to upfront costs, time constraints, and difficulty accessing financial or advisory support. To assist, The Willow Review has also issued fourteen recommendations for SMEs, Government, and financial services, to help SMEs realise the financial benefits of adopting sustainability practices.
Recommendations for SMEs
· Adopt a 5-Point Plan for Sustainability: Encourage SMEs to take 5 simple, actionable steps, these are:
o Switch to sustainable materials.
o Reduce travel and optimise logistics.
o Minimise waste.
o Take action on energy.
o Partner with sustainable suppliers and customers.
· Join SME sustainability networks.
· Investigate informal and formal tracking of sustainability.
Recommendations for financial services
· Provide green finance education to help SMEs understand green commercial opportunities.
· Support sustainable business planning.
· Innovate green finance by championing innovative funding mechanisms and unlocking greater access to support from the public and private sector.
Recommendations for Government
· Assign sustainability champions at the council level to provide tailored support to SMEs, linking to local funding.
· Reframe sustainability messaging to focus on growth, competitiveness, and profitability rather than compliance to better engage SMEs.
· Campaign to enhance uptake of existing resources.
· Support the SME transition.
· Improve access to finance
· Expand the growth guarantee scheme to include green initiatives.
· Drive forward fiscal incentives for SME sustainability.
· Integrate sustainability into the core offering of the Business Growth Service[vi].
Nick Stace OBE, Head of Social Purpose and Sustainable Finance for Barclays UK, said: “SMEs are the backbone of the UK economy. With a clear growth ambition, the UK has a critical opportunity to engage and support SMEs to accelerate the adoption of sustainable business practices, which, as evidenced by The Willow Review, has clear financial benefits and can, in turn, support long-term growth”[vii].
[ii] Green shoots of growth: a quarter of UK SMEs view cuts to carbon emissions as a route to prosperity
[iii] Ibid
[iv] The Willow Review - Final Report
[v] The Willow Review - Final Report
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
