Just 24% of the UK’s 5.5m small businesses currently recognise the benefits of sustainability, according to a recent poll from Small Business Britain, in partnership with BT.
In light of that figure, the independent Willow Review aims to help small business owners find their way around sustainability and unlock its economic benefits. Launched in November and set to run for six months, the review will identify potential financial advantages stemming from sustainable business practices and encourage a wider adoption of those methods among UK SMEs.
The review, which has the backing of the government, is co-chaired by Minister for Small Business Gareth Thomas, Barclays UK Head of Social Purpose and Sustainable Finance Nick Stace OBE and Small Business Britain Founder Michelle Ovens CBE, whose organisation is spearheading the initiative.
“One of the biggest challenges for small businesses is the perception that sustainability automatically equals high costs,” Ovens says. “When you’re running a business on tight margins and limited resources, it’s understandable to hesitate about making changes that don’t seem to offer immediate rewards.”
That doesn’t mean there is no appetite for such changes; in May last year, the Small Business Britain and BT report Small Business, Green Growth revealed that 80% of UK SMEs are eager to adopt more sustainable practices. However, almost half cited access to finance as a major barrier – and more than a quarter feel unaffected by government net-zero commitments.
For Ovens, those findings are clear signs of a gap in communication and tailored support – which is where the Willow Review comes in. “The project aims to show entrepreneurs that sustainability isn’t just good for the planet – it really is good for business,” she explains. “By collecting real data and sharing case studies, the goal is to prove that sustainable practices can drive profitability, innovation and long-term growth for small businesses.”
Compelling case
In Ovens’s assessment, the most impressive small businesses are those that are already weaving sustainability into the fabric of what they do, to the point where it is not just an add-on or box-tick, but part of their DNA. One strong example, she points out, is provided by Caribe Coffee Co. The Morpeth-based business has switched to compostable packaging and donates its used coffee sacks for community reuse and recycling projects. “That sort of circular thinking not only cuts costs, but resonates with customers who increasingly seek out businesses with purpose.”
In joint research with Oxford Brookes Business School, Small Business Britain found that almost two-thirds of UK consumers consider SMEs’ sustainability credentials important. Its subsequent work with BT found that 65% of small businesses believe that their sustainability efforts have helped them attract new customers. “That’s a compelling case for the financial benefits of these practices,” Ovens notes.
With those points in mind, the Willow Review will spotlight the efforts of businesses with similar outlooks to Caribe Coffee Co – SMEs that are cutting their energy bills through use of renewable energy, reducing waste to save money or bringing new customers onboard with their eco-friendly credentials.
“We know that businesses are successfully using their sustainability efforts to help them stand out in competitive markets and access new opportunities, whether it’s through green financing or attracting environmentally conscious consumers,” Ovens says. “The review will make recommendations for other small businesses on how they can do the same – and how financial services and the government can support them on their journeys.”
Smarter decisions
In late 2023, Insights covered a survey of 16,000 SMEs around the world, which found that just 8% of them were reporting on sustainability issues. In Ovens’s view, while sustainability reporting may sound to many SMEs like a big step, it is a “fantastic tool” for those that are seeking to understand their impacts and unlock financial benefits.
“It’s not just about transparency,” she says. “It’s about using data to make smarter decisions. Something as simple as reducing excess energy usage or cutting down on waste can have a measurable impact on the bottom line.”
Ovens stresses that reporting is also about future-proofing. “As more supply chains demand sustainability credentials. Small businesses that embrace reporting will be in a strong position to win contracts and build trust with larger partners. We do know, however, that reporting can feel daunting, so it’s important that business owners feel they have all the knowledge and resources to get going.”
She believes that accountants have a key role to play in helping business owners get to grips with sustainability. “They can show small businesses that it is not just a cost, but an investment with clear returns,” she says. “Internal accountants can help businesses set realistic budgets for things like energy-efficient upgrades and identify grants or tax incentives that make those changes more affordable. Meanwhile, external accountants may bring a broader perspective. They will have an overview of what works across different businesses and industries, and can share that knowledge to help small businesses find the right approach for their own models.”
She adds that accountants can also simplify sustainability reporting by breaking down complex regulations, or helping businesses track their progress in a way that makes sense for them.
For ICAEW Head of Business Simon Gray, sustainability presents small businesses with valuable opportunities, even though, as Ovens points out, getting started may feel somewhat daunting. “Customer engagement and meeting the information requirements of the larger organisations they supply are two important benefits,” he says. “Cost savings are also possible through energy efficiency improvements or better use of existing resources. ICAEW Chartered Accountants play a critical role in helping businesses on their sustainability journey – particularly when it comes to taking that all-important first step.”
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