The green SME dilemma

Amidst escalating economic and environmental challenges, SMEs are at a crossroads. A new report delves into the dilemma SMEs face: how to balance sustainability with financial stability. With 71%¹ of SMEs in the last 12 months viewing sustainability as an opportunity to diversify and grow their business, the report explores how green initiatives can help reduce carbon footprint but also drive business growth and remain competitive. 

The report by Novuna Business Finance – The Small Business Perspective on Sustainability: Investment, Cost or Burden – provides valuable insight learnt from the real-life experiences of small business owners with each story revealing insight into the challenges and successes of sustainability and the pursuit of Net Zero. 

Across diverse sectors, including a bakery and cafe, the fashion industry, real estate and bonsai cultivation, businesses are aware of the challenges they face. Despite these obstacles, they are actively implementing sustainability into the day to day running of their business whilst also recognising the need for balance and that guidance is needed. For many of the SMEs interviewed, sustainable practices resulted in increased customer loyalty, community engagement and new opportunities, ultimately proving to be a good long-term investment.

The case studies in the Novuna Business Finance report, and available in full via ‘The Sustainable Business Podcast,’ clearly illustrate that embracing sustainability is not just about conviction but is also a strategic move that drives success and builds resilience. A snapshot below of the stories available in the report highlights real-life examples of how prioritising sustainability can lead to long-term benefits and growth.

Green advice in the words of SMEs:

• Listen to customers: Tim Everest, owner of Grey Flannel, showcases how sustainable practices can drive business growth in the fashion industry. By integrating sustainable fabrics and responding to customer demands, Grey Flannel demonstrates that green initiatives can be a long-term investment, attracting environmentally conscious consumers and enhancing brand image.
• Maintain balance and practicality: Peter Chan, owner of Herons Bonsai, illustrates a balanced approach to sustainability. Through modest changes like reducing chemical usage and supporting local charities, Herons Bonsai proves that sustainability can be practical and cost-effective, strengthening community ties while positioning the business for long-term success.
• Maintain a low carbon footprint: Lee Michael Horan, co-founder of Polarius International Real Estate, showcases sustainability as a strategic investment in the real estate sector. Through measures like minimising travel and focusing on energy-efficient properties, Polarius not only reduces operational costs but also attracts environmentally conscious clients, ensuring long-term profitability and resilience.
• Recycling and re-using: Becky Barnes, owner of Becky Barnes Style challenges fast fashion norms by promoting sustainable alternatives. Her focus on second-hand shopping and repurposing highlights how sustainability can be an essential investment in the future of the business, fostering customer loyalty and differentiation in the market.
• Strong local focus: Hannah Egerton, owner of Edgie Eats Bakery, demonstrates the impact of local sustainability efforts. By sourcing local produce and implementing eco-friendly practices, Edgie Eats Bakery invests in community resilience, viewing sustainability as integral to the future viability of the business.

Jo Morris, Head of Insight at Novuna Business Finance commented: “Sustainability is not just a buzzword—it’s a vital component of modern business strategy. Our report highlights the real-world successes and challenges faced by small businesses as they integrate sustainable practices. These inspiring stories reveal that sustainability is not merely a cost but a strategic investment that drives growth, fosters customer loyalty, and builds resilience.

“At Novuna Business Finance, we are committed to supporting SMEs in their journey towards Net Zero. By sharing these insights and amplifying these voices through our report and podcast, our mission, as a business is to support more businesses to embrace sustainability, proving that profitability and environmental responsibility can go hand in hand.”

Note:
¹ Market research findings are drawn from Novuna Business Finance reports, with research conducted by Sago research in May 2023 and May 2024 respectively.