Rising costs of doing business are preventing the UK’s 5.5m small and medium-sized businesses from going green, new research finds. 

Oxford Economics has found that more than four in ten (42%) SMEs say that the rising cost of doing business means going green has become less important.

More than half (54%) also believe that while green issues are important, this cannot be at the expense of running their business.

The top three reasons small and medium-sized companies aren’t going green all relate to cost, with a third (32%) blaming the unaffordable costs associated with being an environmentally-friendly business. 

A quarter (26%) feel the lack of government support and grants is the biggest barrier, while nearly a fifth (19%) believe it’s because of a lack of tax incentives.

While costs are a significant barrier to going green, SME owners do back measures to become more sustainable. Three-fifths (61%) believe small companies should prioritise reducing their carbon emissions, and over half (53%) predict that their own business will become more environmentally friendly in the next five years.

Oxford Economics say SMEs contributed 44% of the UK’s non-household carbon emissions, with an estimated 160m tonnes of greenhouse gas emitted. 

Alex Sheard, product manager at small business lender iwoca, said: “This research couldn’t be clearer – SMEs want to go green, and understand how important it is, but the current economic environment is a hugely inhibiting factor.

“For the UK to meet its net zero targets, we must not forget about our SMEs, who account for 99.9% of the business population, and generate over 40% of the UKs non-household carbon emissions

“From how they invest, how they heat and insulate office and factory spaces, to how their employees travel – going green seems to be a significant operational challenge for SMEs, and access to capital is a crucial component in turning this around.”