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How SMEs can afford to go greener in 2021 and beyond

While many SMEs are concentrating on being in the black, rather than the red, it is important that these companies is also thinking about going greener. They don’t want to get left behind. But how can they afford it?

The government has laid down a big marker with its commitment to net-zero emissions by 2050 and if the country is to achieve this goal, businesses have to play their part. While sustainability programmes are now a common feature of larger company strategy (and a source of good PR – just look at Brewdog), progress is slower among smaller firms.

This trend is hardly surprising given the hurricane-level headwinds small businesses have had to face over the last year or more. But at the same time, it is important that these firms do more to go greener, not least as they represent a significant amount of the country’s business activity.

What is stopping SMEs from better targeting net zero emissions?

A recent survey by the British Standards Institution found that just one in five small firms have committed to a net zero target, compared to 50% of larger companies, while another study from the Carbon Trust revealed that almost 70% of SMEs do not have a consistently documented and implemented energy policy.

However, encouragingly, the latter study also found that 80% of SMEs are taking action on energy efficiency and that over 50% wanted to do more in this area. Furthermore, more research from the Entrepreneurs Network and the Enterprise Trust shows that over 60% of SMEs believe that a move to a greener economy in the post-Covid era presents positive opportunities.

Clearly there is an appetite among small businesses to do more to go greener, which is a development that is considered to hold opportunities for growth in the post-lockdown marketplace. So, what it stopping them? Tellingly, according to the Carbon Trust, the major barrier to improving energy efficiency is a lack of time and money.

How can SMEs finance sustainability strategy development?

So how can small firms finance sustainability strategies in the current climate? How can they take steps such as removing all single-use items from their businesses, using recyclable packaging, switching to electric fleets (cars and bikes) and reducing waste during production?

Awareness of all the finance options available to them is vital, from government support schemes to the services of alternative lenders.

Post-lockdown investment and how alternative lenders can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the coronavirus pandemic, facilities such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Notably, alternative lending is playing a prominent role in the government’s new headline emergency support scheme, the Recovery Loan Scheme. Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Sustainability investment and SME finance options

The importance of going greener and achieving greater energy efficiency, and helping to achieve the 2050 net-zero goal, cannot be understated. And while this is a challenging time to take such steps, it is important that strategies are developed. This is why it is vital that business leaders are in a position to take advantage of all available SME finance options.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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