Sustainability and decarbonisation are slipping down the priority list for UK small and medium-sized enterprises (SMEs), according to new research and programme findings.
SMEs account for 99% of the UK business population,1 meaning any slowdown in their climate action risks undermining the government’s net zero ambitions. Keir Starmer has set the country’s sights on an 85% cut in emissions by 2035,2 but smaller firms are increasingly focused on short-term survival amid rising costs and economic uncertainty.
However, one set of new findings suggests a relatively modest, targeted support could rapidly accelerate SME decarbonisation. Better Bankside, the Business Improvement District for London’s Bankside area, has published results from the second stage of its Southwark Climate Collective (SCC) programme,3 which aims to help SMEs reduce emissions and improve resilience.
The programme indicates that an investment of around £5,000, combined with approximately 20 hours of tailored consultancy, can unlock significant sustainability progress within small businesses.
While based on a relatively small cohort, the findings point to a wider structural issue: SMEs are often willing to act on sustainability but lack the time, expertise and resources to implement changes.
The second phase of the programme supported 24 SMEs through bespoke one-to-one consultancy, alongside training sessions, workshops and online resources made available to a wider group of 60 additional businesses.
This approach marked a shift from the programme’s initial phase, which supported 141 SMEs in 2024 through audits and recommendation reports. Evaluation of that phase found that, although audits were valued, many businesses struggled to act on recommendations due to limited capacity, difficulties securing internal or landlord approval, and challenges maintaining engagement.
From audits to implementation
In response, the second stage moved away from a standardised, audit-led model towards a more flexible, implementation-focused approach.
Findings from the programme highlight several consistent barriers and opportunities across SMEs:
• Small, targeted investment can deliver outsized results when combined with specialist support
• Sustainability strategies must be tailored rather than standardised
• Many SMEs are motivated but lack clarity on where to start or how to measure impact
• Resource constraints — particularly time and staffing — are the primary limiting factors
• “Greenhushing” remains widespread, with firms hesitant to communicate sustainability efforts
• Fragmented or incomplete carbon data continues to hinder progress
The programme also found strong demand for practical training, particularly around carbon literacy, sustainability certifications, circular economy approaches and emissions reporting.
SMEs face structural support gap
Despite growing regulatory and market pressure to decarbonise supply chains, many smaller firms lack access to the tools and expertise needed to respond effectively.
About the programme’s approach, Nicole Gordon, CEO of Better Bankside, said:
“It is not enough to simply provide SMEs with auditing tools, or decarbonisation knowledge. They need practical support to help them actually get things done.
“Most small businesses are time-poor and lack the internal capacity or expertise to deliver sustainability alongside day-to-day pressures. What surprised many of us, including the experienced consultants we brought into the project, was how willing SMEs were to engage deeply when the support was right.”
A model for national scale?
Better Bankside argues that the SCC model could be replicated more widely through Business Improvement Districts (BIDs) and local authorities, using standardised tools and frameworks developed through the programme.
The organisation is calling for a shift in national policy to better support SMEs, including:
• Greater investment in small-scale, high-impact sustainability support
• Incentives such as sustainability-linked business rates relief
• Development of a national SME sustainability toolkit
With SMEs forming the backbone of the UK economy, the findings suggest that unlocking their decarbonisation potential may depend less on ambition and more on access to practical, targeted support.
Notes
[1] https://www.fsb.org.uk/media-centre/uk-small-business-statistics
[2] “Starmer announces UK target for 81% carbon emissions cut by 2035”, BBC News.
[3] On 10 April, the programme announced its shortlisting for ‘Behaviour Change Campaign of the Year,’ by the 2026 UK Green Business Awards, recognising three years of work supporting over 200 Southwark SMEs embed sustainability into their everyday operations.
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