Corporate sustainability action is already driving significant change across the UK but there is growing evidence SMEs are in danger of being left behind.

With a typical advice firm having just eight employees, according to PFS data, many could fall firmly into this category.

Nine out of 10 UK SMEs are unsure of how the government’s 2050 net zero targets will affect their business and prioritisation of sustainability within SMEs remains subdued compared to 2022, according to the latest Natwest Sustainable Business Tracker.

Inflation was cited by firms as the biggest obstacle to climate action in the next 12 months, along with difficulty in measuring their carbon footprint and staff skills shortages.

Get ahead of any potential environmental legislation that may be introduced

Many businesses may also be paralyzed into inaction by not knowing where to start with moving to a lower carbon and more sustainable business model or be concerned about focusing resource in the wrong areas, especially in light of the government’s recent announcements regarding the delay to some key climate pledges. However, I’d argue that the greater corporate risk is in doing nothing at all.

Here are some practical steps advice firms of any size can take to get themselves on the road to contributing to a more sustainable future.

1.Undertake an audit

Measuring your corporate carbon footprint is the first step towards being able to reduce it. There are a wide range of free tools and resources available online to support this, including a business carbon calculator offered for free through the SME Climate Hub and the Carbon Trust’s carbon footprint calculator.

Under the Greenhouse Gas Protocol, all organisational footprints must include Scope 1 and 2 emissions that a company creates within its own operations, including emissions a company makes directly, from boilers and company vehicles for example, and emissions it makes indirectly from things such as purchased electricity, heating or cooling.

 If you only have the resource to tackle a certain theme at a time, this is still far better than doing nothing at all

Alternatively, firms can employ the services of a specialist third party, as calculations can be done at varying levels, depending on the level of your company’s net zero or sustainability. Reporting on Scope 3 emissions, for example, is voluntary and can be more complex as it covers any other indirect emissions from sources outside your direct control, such as employee commuting, business travel and emissions within your wider value chain.

2.Create your framework

Creating a framework involves taking a helicopter view and looking at each pillar of the business through a sustainability lens, to understand how it could do things differently.

Within your ‘people’ pillar, for example, you will be considering things such as your recruitment strategy and processes, employee remuneration and looking at your supply chain if you utilise an external recruiter.

There will naturally be places where you can more easily make a difference and those areas that require longer term projects, but these can be built into existing three- or five-year business plans.

One of the drivers for our decision to apply for B Corp Certified status was wanting a framework to capture many of the activities we were already undertaking across the business.

There may be funding that your business is eligible for

B Corp offers a structure within which to measure, target and evidence behaviours on a wide range of sustainability factors but there are a whole range of corporate accreditations and certifications out there that involve differing levels of impact measurement, including the Good Business Charter, FutureFit Business and Planet Mark.

The key thing is to recognise the benefit of incremental change and if you only have the resource to tackle a certain theme across the business at a time, such as waste and recycling or installing renewable energy systems, then this is still far better than doing nothing at all.

There may also be funding that your business is eligible for and the UK Business Climate Hub provides a regularly updated list of grants, funding and interest-free loans available to firms across the UK.

3. Bake into the business

To meaningfully deliver on your goals, sustainability needs to be baked into your business strategy and culture, which includes your governance, policies and processes.

This can include embedding sustainability into business cases, ensuring alignment within project management or adopting a ‘triple bottom line’ accounting system that incorporates social, environmental and financial performance.

Culture is vitally important and while it’s crucial those in leadership positions genuinely care and set the agenda, real change isn’t going to happen without buy-in from across the business.

Taking action on decarbonisation can lower company expenditure on energy, travel and service costs

This begins by everyone having a baseline understanding of sustainability in relation to the business objectives and how it relates to their own role. Companies could then consider measures such as appointing sustainability champions, hosting an annual sustainability week or calendar of events and offering volunteering days to help drive momentum and buy in.

SMEs are well positioned to begin their sustainability journey as they are more likely to have a limited number of offices, employees and suppliers. There is no denying the current environment is challenging for many businesses, but small steps still make a difference and it is far better to begin to transition at your own pace and get ahead of any potential environmental legislation that may be introduced.

Additionally, taking action on decarbonisation can lower company expenditure on energy, travel and service costs, as well as being an attractor for both clients and future talent, looking for a company whose values match their own.

Caroline Hawkesley is UK managing director for Progeny, a B Corp Certified company