Small and midsized enterprises (SMEs) are drivers of economic growth and employment. However, while playing a vital role in the economy, SMEs contribute to nearly half of the UK’s greenhouse gas emissions. How are UK firms stepping up to combat climate change and mitigate environmental and business damages? We surveyed 269 decision-makers in UK SMEs to find out more.

In this article
- How concerned are employees and businesses about climate change?
- Are UK SMEs modifying business practices to minimise the impact of climate change?
- What are the top reasons SMEs are changing their practices due to climate change?
- How are businesses responding to climate change?
- Are SMEs using software to help meet their climate goals?
- SMEs are reactive to climate change, but more must be done
As the UN COP27 climate summit drew to a close in November 2022, speakers restated the global commitment to tackling the effects of climate change in the face of the current energy crisis. In the UK, the government is pursuing its Net Zero Strategy to reach net-zero greenhouse gas emissions by 2050. Furthermore, its sixth Carbon Budget aims to bring the UK 75% of the way to this goal by 2035.
SMEs account for 99.9% of the UK’s business population and play a crucial role in the fight against climate change. These businesses contribute significantly to industrial emissions through their facilities or third parties from whom they buy energy.
However, SMEs may be less equipped to handle the impacts of climate change than larger firms due to limited resources. How are UK SMEs tackling climate-related issues and taking steps to reduce emissions? What is their degree of involvement in mitigating their environmental impacts? We surveyed 269 managers and executives from UK SMEs to find out. The full methodology for conducting this study can be found at the bottom of this article.
How concerned are employees and businesses about climate change?
Many UK SMEs are facing challenges caused by inflation, supply change interruptions, and the impact of COVID-19, to name but a few. It would be easy to see tackling climate change as one extra burden for employees and managers. However, 84% of the executives we surveyed said employees have shared concerns about climate change. Nearly half of respondents said employees have done so to a great extent.

Companies should listen to employees’ concerns about climate change. Today’s workers are not afraid to look for other job opportunities if employers don’t address their concerns or meet their expectations. Some workers are also leaving jobs to look for employment opportunities at companies with a positive carbon footprint, a practice known as ‘climate quitting.’
Business leaders are also concerned about climate change. 82% of respondents stated that they were either ‘somewhat’ or ‘extremely’ concerned about the impact of climate change on their business. However, there were still 16% of respondents who were ‘not very’ worried and 2% who were ‘not at all’ concerned about climate change risks to their company.
SMEs should encourage employees to share their concerns and contribute ideas for how processes can be improved to help reduce emissions. This could be a win-win situation, as this can increase employee engagement, provide a source of valuable feedback, and raise brand awareness of the company’s activities to fight climate change.
Are UK SMEs modifying business practices to minimise the impact of climate change?
Seeing that a majority of both businesses and employees are concerned about climate change, we wanted to know if these concerns had led to UK SMEs taking steps to modify their business strategies and minimise their impact on the environment.
Nearly two-thirds (64%) of respondents said they were already implementing changes. Meanwhile, another 31% expressed their interest in doing so. Only 5% of companies said they are not interested in modifying their business strategies to minimise the impact of climate change. When we asked the group of respondents who would like to change their business practices to indicate up to three reasons why they haven’t done so yet, they most frequently cited:
- A lack of information on how to take action (45%)
- Insufficient financial resources (31%)
- Not enough employees to implement new practices (29%)
Tip for SMEs
SMEs can use government resources such as the UK's SME Climate Hub to access information and support in their transition towards a low-carbon business. The Climate Hub provides tools, resources, frameworks, and guides to help SMEs reduce, measure, and report emissions and contribute to climate action in society.
SMEs need investment to tackle climate change
The journey to net zero requires finance. Many SMEs need external funding to help them reduce emissions. Even for our survey respondents who were already implementing changes to reduce the impact of climate change, 50% stated that a lack of financial resources was a challenge they faced in implementing these measures.
Financial institutions can play a key role in helping businesses deploy this shift to low-carbon economies. This can be through lending and green investment opportunities.
Additionally, many businesses are focusing on environmental, social, and governance (ESG) efforts to show investors and customers they have sustainable and responsible practices in place, which we explore further in the second article based on this survey. This can benefit companies by helping them showcase that they have optimised regulatory, legal, and resource controls.
With this in mind, SMEs should also find ways to allocate their resources to meet climate-related goals to be able to report back on their progress.
Tips for SMEs
Environmental, social, and governance (ESG) refers to the set of standards that measure the impacts and transparency of a business towards its stakeholders, society, and the environment.
It is essential these criteria are available to the public through annual reports and documents as this can also encourage investment, attract new customers, and improve reputation.
ESG software can help support companies in developing their ESG strategy; for example, by automating the collection of data related to their environmental initiatives.
What are the top reasons SMEs are changing their practices due to climate change?
We have seen that two in three UK SMEs are implementing strategic changes to mitigate the multiple impacts of climate change. Among this group, 85% said their company’s strategy included specific environmental and climate goals.
Furthermore, for 60% of respondents, the reason why their company was modifying its business practices to minimise the effects of climate change was that their organisation genuinely believes it has a responsibility to take care of the environment.
Investor, consumer, and client expectations also play a part in the deployment of climate change-focused business practices for 38% of respondents. 36% of executives in SMEs modifying their practices also stressed the need to respect compliance requirements, and 35% acknowledged that climate policies could enhance their reputation.

How are businesses responding to climate change?
There are multiple ways SMEs can change business practices to mitigate the impact of climate change. We asked our respondents who were already applying changes to indicate what measures they were taking.

UK SMEs are responding to climate change and the need to reach net zero in different ways. These include optimising the use of waste, managing recycling processes, and increasing energy efficiency. This can be done by incorporating sustainable policies, such as promoting a paper-conscious mentality by finding more efficient ways to manage documents or incorporating ways to digitally verify and sign off reports and contracts.
To whom do companies delegate the responsibility for implementing climate goals?
The responsibility for implementing a company’s climate goals can be delegated to various departments and individuals within an organisation. This can often depend on diverse factors such as the size and structure or goals of a company. We asked our respondents to indicate who was responsible for implementing climate goals within their business.
Half of the companies who are already implementing changes said they have a specific department, such as an ESG or Sustainability department, in charge of this responsibility. Of these, 27% have more than one person working on this task, while 23% had delegated the task to only one employee.
For 16% of surveyed businesses implementing measures to address climate change, the managers and board of directors are directly responsible for these tasks. In comparison, 15% of respondents say the HR department is in charge of these activities.
Tip for SMEs
Cross-functional teams can allow SMEs to share the responsibility for these activities among departments or individuals while integrating different levels of expertise in tackling climate change. Tools like change management software can help businesses plan, orchestrate, and measure these changes in processes.
How successful are the environmental measures SMEs have taken to address climate change?
Our survey shows that SME executives applying changes to their business strategies to mitigate climate change risks generally feel satisfied with the results. 31% of respondents say the measures taken by their company have been ‘extremely successful’, while 64% feel they have been ‘somewhat successful’, but their organisation could do more. Only 5% of this group of survey-takers say the measures taken so far haven't been very successful and that their company is not doing enough.
When developing business strategies, one of the steps after engaging staff and deciding who will be responsible for overseeing these changes is measuring and assessing the progress of this journey to net zero.
The top three metrics our respondents have used to measure the success of their environmental measures were:
- Waste reduction targets (67%)
- Energy consumption targets (63%)
- Recycling targets (49%)
Are SMEs using software to help meet their climate goals?
SMEs can use technology to help mitigate climate change. 56% of companies implementing environmental measures say they use technology or software as part of their business response to climate change. 43% don’t make use of these tools, with the remaining respondents being uncertain about their company’s use of technology in their strategies.
According to our respondents who said they used technology, the two most used software solutions are energy management software (76%) and waste management software (41%).
Tips for SMEs
SMEs can use energy management software to track energy use and efficiency. Energy monitoring tools help reduce energy consumption, costs, and carbon emissions. Similarly, waste management software also provides managers with tools to help optimise workflows related to scheduling transportation, storage, and disposal of waste products.

SMEs are reactive to climate change, but more must be done
In view of the results of our study, the majority of UK SMEs appear to be taking responsibility for the implementation of business strategies for climate change.
However, there is still some way to go before achieving the set objective of net zero. This was expressed by the number of respondents who stated that while they were satisfied with their efforts to combat climate change, they acknowledged they could do more.
SMEs play a vital part in achieving a carbon balance. Their role in supplying products and resources to larger companies only strengthens the pressure on SMEs to decarbonise and modify business strategies to combat climate change.
Finance is vital to facilitate this action, and many SMEs need access to external funds to help reduce emissions. Adopting an ESG framework can help SMEs to attract sustainable investing, but they need the proper tools to develop, track, measure, and report on their ESG initiatives. In the second part of our survey, we will look further into the challenges companies face when looking to apply ESG initiatives and what support SMEs expect from the government to help them tackle climate issues.
Methodology:
To collect the data for this report, Capterra conducted an online survey in December 2022 of 269 UK business owners and managers from a variety of industries. The respondents were selected according to the following criteria:
- Resident in the United Kingdom
- Over 18 years old
- Owner, executive manager, or senior manager at an SME (company with 2-250 employees)
- Works in a company where a significant portion of the employees regularly attend a physical workspace/office
- Must be able to identify the main business model of their company (B2B, B2C, or B2G)
- Works in a company that sells either products, services, or both
- Works in a company that was founded more than one year ago