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How SMEs can accelerate spending on going green in 2024

Small businesses have a key role to play in the shift to a net-zero carbon future. However, while more and more firms are committing to change, there is a sense that the pace of development could be quicker. What is stopping them and what’s the solution?

How are SME progressing towards green goals?

First, the good news – according to the new Aldermore Green SME Index, the number of SMEs going green doubled in 2023. The report reveals that 489,000 businesses have formally pledged to reach “sustainability” by the 2050 net zero government deadline, compared to 220,000 a year earlier.

At the same time, more than two million firms indicated that they have started out on the path to achieving net zero. Research from Trainline Partner Solutions paints a similar picture – with its study showing that 83 per cent of businesses want to “bolster support” for staff, through policies and budgets, in relation to choosing lower-carbon travel options.

Notably, the study also showed that just over half of SMEs had already set targets for reducing business-travel emissions, with a further two thirds expecting to put such planning in place in 2024.

What is holding back SME investment in going green?

These findings are encouraging, but there is a caveat – progress could be quicker. Results from the Aldermore research provide evidence of this reality. The report underlines how hard it has been for firms to go green over the last 12 months, with the economic climate and change-related costs a primary barrier to development.

Notably, more than two thirds of SME decision-makers pointed to obstacles to green-led investment, with an even higher number expressing their belief that government help and legislative change is necessary to make a difference.

A new report from the Institute for Public Policy Research goes further, arguing that a lack of green industrial strategy is harming the economy by stopping businesses from benefiting from the advantages offered by the global move towards a lower-carbon future.

Green growth and how alternative lenders can help

Critically, the will is clearly there, but the problem for many small firms when it comes to going green is the means, with the costs of development proving prohibitive for many. And it hardly surprising that businesses are being hesitant given the current pressure on capital.

As such, the call for more help from the government makes sense, but against the backdrop of an increasingly dysfunctional and chaotic political climate, such assistance can hardly be counted on. So, how can firms find the money to invest while safeguarding cash flow?

One of the solution is alternative finance.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate (with 65% more SMEs experiencing difficulty in accessing finance from high-street banks).

These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

This profile has helped cement the reputation of alternative finance in the business sector, with a new study showing that more than 50% of small businesses are looking to use finance to achieve growth.

Small firm finance options for going green in 2024

The year ahead looks critical for the contribution of SMEs to wider net zero ambitions. There is cautious optimism around an improvement in economic conditions and this could prove a catalyst for greater investment in going green. Accessing finance will be crucial to progress and overcoming cost-related obstacles – this is why it is vital that firms are aware of all the finance options available to them, including the services of alternative lenders.

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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