UK small businesses are jumping on the climate bandwagon, but economic uncertainties may play spoilsport

While the COP27 has brought global leaders together to intensify efforts to address climate issues, small businesses in the United Kingdom have already started their journey towards the common goal but many are also concerned about economic challenges they may face in 2023 which may force them to make difficult choices, according to Novuna Business Finance.

In a survey of more than 1,000 UK small businesses, a whopping nine in ten (89%) are working towards Net Zero operations.

About 13% of them believe their business is already operating at Net Zero while 31% have a formal Net Zero plan in place that they are working on.

In addition, 45% of enterprises don’t yet have a specific plan but are taking positive steps toward carbon reduction.

One in four (26%) small businesses are reviewing their energy usage and considering renewable alternatives while one in five (20%) are switching to greener forms of transport.

In addition, about 22% of SMEs are evaluating how they can have a positive social impact on their immediate community and 18% are actively contributing to local green initiatives – such as litter picking and community green energy projects.

The vast majority (85%) of businesses are finding creative ways to put sustainability higher up the agenda.

They are taking initiatives like 27% of them looking for greener ways to do things, 21% having a staff suggestion box, 17% discussing green issues in senior management meetings and 16% have invested in green initiatives for staff such as bike sheds, working from home, etc.

Whilst climate progress has been good this year, one in four small businesses say economic challenges threaten to slow down progress going into 2023.

A little less than one-quarter (23%) of small business owners said they find it difficult to balance environmental concerns with the current economic challenges they face, and for 21% of respondents, the top priority right now is just keeping the business afloat.

Financial constraints have been mentioned as a major obstacle to further progress on sustainability due to increased living costs and economic uncertainties, with 24% of respondents indicating they no longer have the budget.

This indicates that some SMEs may opt for raising capital to sustain their business, but the ability to obtain financing is based on sound cash flow management.

Effective cash flow management is also strongly related to the capacity to repay these loans on time. This means that handling your client receivables and being paid on time is essential for the survival of SMEs.

Get more tips on effective cash flow management from our book, Let the Cash Flow. To find out more about how RIABU helps small businesses get paid on time, visit RIABU.com