Only 14% of SMEs have plans to reduce environmental impact – Aviva

Three-quarters (76%) of small to medium sized enterprises (SMEs) believe that businesses should work on reducing their environmental impact, but only 14% have plans in place.

This is according to Aviva’s latest SME Pulse survey that looked at 507 SMEs across the UK from 10 December 2021 to 2 January 2022. The study was conducted by YouGov on behalf of Aviva.

The 14% of SMEs with plans in place were unevenly distributed across the country – SMEs in the East of England were most likely to have planned to reduce their environmental impact at 21%, followed by London at 19% and the South at 16%.

Scotland (11%) and the Midlands (10%) trailed behind while SMEs in the North and Yorkshire were least likely to have made plans (8%).

According to British Business bank, SMEs make up 99% of British businesses and are collectively responsible for one-third of UK emissions

Adam Winslow, Aviva UK’s and Ireland general insurance chief executive, said: “It’s heartening to see that SMEs – a fundamental part of British business – are clearly increasing their sustainability activities as part of the fight against climate change.

“The sad fact, however, is that more and more businesses will be impacted by climate-related events such as floods, subsidence and heat-related risks as temperatures rise, putting their survival under threat. At Aviva, we see first-hand the long-term effect of these events on financial resilience and wellbeing.”

“But there are positive signs.”

Winslow pointed out that one-fifth of SMEs have business resilience planning as one of their top focus areas for this year, demonstrating that they are aware of the need to be prepared for the unexpected.

“If we have learnt anything from the last two years it is the importance of this preparation,” he added.

It follows SMEs being hit by the impact of the Covid-19 pandemic and knock-on effects on business interruption. 

Structured approach

The survey also revealed that 38% of SMEs are using renewable energy to power operations, with 35% of those who use renewable energy generating their own.

Meanwhile, more than one-third of SMEs (35%) are reviewing their supply chain to identify areas that need to be more sustainable.

The sustainability focus from SMEs is not simply on environmental issues – 22% of businesses are looking to make sure they are better prepared for the future by including business resilience planning in their 2022 priorities.

There are also potential benefits for those who plan to take climate action – SMEs that reported a structured plan in place to reduce climate impact had higher growth expectations.

This was in direct comparison to those that did not have a plan in place – businesses with a plan to reduce their climate impact had an average growth expectation of 40%, compared to an average of 34% for businesses that did not.

Winslow continued: “A structured approach to sustainability makes commercial sense, in addition to being environmentally responsible.”

For example, businesses that are producing their own sustainable energy will be better insulated from current increased energy prices.

Winslow explained that Aviva is supporting SMEs in a number of ways to improve sustainability and mitigate the impacts of climate-related events.

This includes its Loss Prevention Standards on the Aviva Risk Management Solutions website and Building Future Communities work which calls for the government to better support SMEs in preparing for climate events.

SMEs use various sources for information and advice when planning how to make their business more sustainable. For example, 31% look to government advice, 29% rely on desk-based research and 20% approach peers and business groups for information.

This suggests that SMEs could benefit from clearer guidance on where to turn for reliable sources of information when planning how to make their business more sustainable.

Aviva has also worked with its partners at Enterprise Nation to deliver guidance for businesses to implement a structured plan that will build on the efforts many SMEs are already making.

Serene Morden McDade founded Poise and Go, an SME covered by Aviva that has used the Enterprise Nation tools to build its sustainable skincare business.

She said: “Sustainability is a non-negotiable, for me and increasingly for our customers. We performed a full sustainability review on all of our suppliers, so our products are at least 96% of natural origin, made from sustainably conscious materials and as biodegradable as possible. We also are actively working on kerb side recyclable packaging.

“We know that all beauty brands are moving this way, customers are increasingly savvy and they vote with their pockets, so products need to be more reusable, refillable or recyclable. As a business if we don’t tick those boxes now, we will be out of the game as customers become more conscientious in the way they buy.