Aviva research: SME’s working to reduce climate impact, but few have a plan to do so

• 76% of SMEs agree that businesses should work on reducing their impact on the climate
• However, only 14% have a structured plan to reduce their carbon footprint / climate impact
• 38% are using renewable energy to power their operations, 35% of whom generate their own
• 35% are reviewing their supply chain to improve sustainability

Three-quarters of small-to-medium-sized enterprises (SMEs) believe that businesses should work on reducing their environmental impact - but few have a plan in place to do so.

Aviva’s SME Pulse survey1 of more than 500 SMEs found that 76% agreed that "all businesses should work on reducing their carbon footprint / impact on the climate". Despite this, only 14% had a structured plan in place to reduce the carbon footprint / climate impact of their business. This was highest in the East of England where 21% of businesses had a plan in place.

SMEs make up 99% of British businesses2 and are collectively responsible for one-third of UK emissions3 , as reported by the British Business Bank. There are, however, positive signs in Aviva’s SME Pulse which indicate that SMEs are working to reduce their emissions output.

While a minority of SMEs may have a structured plan in place, many more are taking actions to reduce their impact. Thirty-eight percent of SMEs are using renewable energy to power their operations, with 35% of those who use renewable energy generating their own. More than one-third of SMEs (35%) are reviewing their supply chain to identify areas that need to be more sustainable.

The sustainability focus from SMEs is not simply on environmental issues. Twenty-two percent of businesses are looking to make sure they are better prepared for the future by including business resilience planning in their 2022 priorities.

There are also potential benefits for those who plan to take climate action: SMEs that reported they had a structured plan in place to reduce their climate impact had higher growth expectations compared to those who did not have a plan in place (40% compared to 34%).

SMEs look to a wide range of sources for information and advice when planning how to make their business more sustainable: 31% of SMEs look to government advice; 29% rely on desk-based research; and 20% Page 2 Aviva: Public approach peers and business groups for information. This suggests that SMEs could benefit from clearer guidance on where to turn for reliable sources of information when planning how to make their business more sustainable.

Adam Winslow, Chief Executive Officer of Aviva UK & Ireland General Insurance, said: “It’s heartening to see that SMEs - a fundamental part of British business – are clearly increasing their sustainability activities as part of the fight against climate change. The sad fact, however, is that more and more businesses will be impacted by climate-related events such as floods, subsidence and heat-related risks as temperatures rise, putting their survival under threat. At Aviva, we see first-hand the long-term effect of these events on financial resilience and wellbeing.

“But there are positive signs: one-fifth of SMEs have business resilience planning as one of their top focus areas for this year, demonstrating that they are aware of the need to be prepared for the unexpected. If we have learnt anything from the last two years it is the importance of this preparation.

“A structured approach to sustainability makes commercial sense, in addition to being environmentally responsible. For example those businesses that are producing their own sustainable energy will be better insulated from the increases on energy prices we are seeing in the market at the moment. We are supporting SMEs in a number of ways to improve sustainability and mitigate the impacts of climate-related events. This includes our Loss Prevention Standards on the Aviva Risk Management Solutions website and our Building Future Communities work which calls for the government to better support SMEs in preparing for climate events. We have also worked with our partners at Enterprise Nation to deliver guidance for businesses to implement a structured plan that will build on the efforts many SMEs are already making.”

Serene Morden McDade is the founder of Poise and Go - an SME covered by Aviva – who used the Enterprise Nation tools as part of building her sustainable skincare business. She said “Sustainability is a non-negotiable, for me and increasingly for our customers. We performed a full sustainability review on all of our suppliers so our products are at least 96% of natural origin, made from sustainably conscious materials and as biodegradable as possible. We also are actively working on kerb side recyclable packaging.

“We know that all beauty brands are moving this way, customers are increasingly savvy and they vote with their pockets so products need to be more reusable, refillable or recyclable. As a business if we don’t tick those boxes now, we will be out of the game as customers become more conscientious in the way they buy.”

Authored by Aviva