Our latest insight report highlights the need for incentives for SMEs to improve their environmental performance and meet net zero targets.
Following the conclusion of the COP27 Climate Change Summit, we have published a new report on Supporting Green Manufacturing which analyses the characteristics and objectives of SME manufacturers in relation to their environmental performance and the implications for future business support.
The report, which analysed data from over 2,000 SME manufacturers in England that have received support through our Manufacturing Growth Programme, found that most SMEs know they need to improve their environmental performance but are not investing in projects to address this issue through the programme.
The report found:
- Less than 4% of projects taken forward by companies focused on environment and sustainability compared to 30% on marketing and 24% on productivity.
- 35% of the SME manufacturers do not know how much energy they use and do not have actions in place to reduce this.
- 41% of companies do not regularly review their business operations to identify how to use resources, water and energy more efficiently.
- The sectors that scored best on environmental performance include chemicals, packaging and paper, textiles, and food and drink.
Jane Galsworthy, Managing Director of Oxford Innovation Advice said: “If the UK and local areas are serious about meeting net zero targets, then there needs to be more incentives to stimulate SMEs to prioritise improving their environmental performance. It is particularly important to engage manufacturing SMEs in environmental management but at the moment the incentives aren’t there to encourage them and those companies that are taking action are focused on short-term benefits rather than long-term ones.”
In terms of what this means for business support, the report concluded that whilst the analysis does not support targeting future support programmes based on company characteristics, screening could help to focus resources on SMEs that are: able to achieve greater environmental benefits; at key transition points in their development, and ambitious in relation to net zero.
A high proportion of the companies are likely to require support to aid their monitoring and measurement of resource use and waste, with potential outcomes associated with efficiency gains and resilience (especially in light of escalating energy costs).