£2 million sustainability pot to help small businesses slash their costs

Businesses that opt to put sustainable measures in place could apply for a share of a £2 million funding pot that the Government has launched to help businesses cut costs and do their bit for the environment at the same time. 

The funding will be given to SMEs to help them lower their bills and become more energy efficient through investment in heating, insulation and solar power technology.

The funding will come through the ‘Made Smarter Adoption Programme’, which is a wider Government plan to push technology, largely digital uptake, especially among SMEs. 

Clear return on investment

The funding boost comes off the back of The Willow Review, an independent though Government-backed review, which aimed to underline the financial benefits of sustainability for small businesses across the UK.

Published last year, it reported that 67% of SMEs who adopted sustainable practices, including installing solar panels or selling energy back to the grid, reported reduced operational costs. 

It made recommendations both for the Government and businesses, with the focus on “…developing long-term consistency and clarity around policy and regulation as it impacts SMEs, ensuring that they can have confidence in their sustainability efforts.”

Government measures

This latest boost to funding was one suggestion, but the authors also pushed that access to finance in more general terms needed to be improved for both Governmental grants and also for initiatives from their private sector. 

The report also encouraged the Government to “assign sustainability champions at the council level to provide tailored support to SMEs, linking to local funding” and made people more aware of resources, including the existing UK Business Climate Hub.

However, the report suggested that a key measure should be the “reframing” of sustainability messaging. “Focus on growth, competitiveness, and profitability rather than compliance to better engage SMEs,” the authors wrote. In a time when SMEs are concerned about what many argue is an increased administrative load, this is sage advice. 

Why the focus on SMEs?

The Government response to the report – and the fact that it was commissioned at all – shows that there is a focus on encouraging SMEs towards sustainability. The Government wrote: “There’s a common misconception that sustainability is the preserve of corporate giants, because they’ve got the time, people and resources to commit to such efforts.”

It added that this review has shown that “…it’s small businesses – the backbone of our economy – who stand to benefit the most from investing in sustainability.”

The report gave seven main suggestions for SMEs, including switching to sustainable materials in production; minimising their waste; reducing travel and optimising logistics; as well as joining mentoring programmes and networks that could help their efforts. 

It also added prioritising sustainability could help businesses attract new customers, so it could be good for growth. The report data revealed that 35% of the businesses interviewed had seen an increase in customer loyalty, while 53% reported they had won new customers. 

Implementation in difficult times

The Willow Report is obviously ambitious in its recommendations. The Government response acknowledged that SMEs are facing some huge challenges at the moment, including high energy prices; inflationary pressures and “constrained access to finance”. 

Many businesses will already be taking action to reduce their energy bills, and this number might go up when the proposed business rate hikes come into being. Confidence, especially in the hospitality sector, is low, and so a move towards sustainability might be a low priority for businesses struggling to survive, despite promised benefits. 

The Government writes: “While the benefits are real, the journey to realise them is not always simple. We are committed to supporting SMEs through this complex transition, recognising that there are multiple opportunities for growth and reducing energy bills as well as potential risks and associated costs.”

What business owners will be looking for are quick financial wins and the prospect of a long-term impact that will help in these tough times. As a Federation of Small Businesses report revealed, only 26% of small firms “feel they have the appropriate knowledge to transition to net zero”, and just 14% believe they have the necessary time. 

While many businesses no doubt have sustainability ambitions, they will need financial and business support to achieve them.