Sustainability in business: latest trends and statistics
This report reveals the industries and regions leading the way in sustainability, the biggest barriers SMEs face, and the actions they’re taking to go green.
Sustainability is shaping the future of UK business as environmental responsibility is now not only a legal requirement, but also closely linked to financial stability, customer trust, and competitive advantage.
To reveal the current state of sustainability in business, we’ve surveyed over 500 UK SME owners, asking for their top motivations, actions taken, barriers to implementing sustainability measures.
Our nationwide SME survey reveals:
Almost three-quarters (72%) of business owners are confident that they can stay financially stable while being environmentally responsible
Only 7% feel unsure or lack confidence in balancing sustainability goals with the financial demands of running a business
Nearly two-thirds (62%) believe they can meaningfully contribute to the UK’s targets of halving greenhouse gas emissions by 2030 and achieving net-zero by 2050
Confidence is strong, but there’s still a gap between ambition and action, with one in 10 (10%) survey respondents reporting not having taken action to reduce their environmental impact.
For many small businesses, access to funding is key. Tools like business loans allow SMEs to spread the cost of green investments over time, meaning they don’t have to dip heavily into day-to-day cash flow.
This makes it easier to take on bigger sustainability projects without the immediate financial burden, while still keeping operations running smoothly.
Key UK business sustainability statistics
Lack of funding support is the top barrier to implementing sustainability measures, cited by over two-fifths (44%) of SMEs as one of their biggest challenges
Manufacturing leads all sectors in sustainability action, scoring 7.9 out of 10 based on climate concern, strategy, risk monitoring, and emissions reduction
SME owners aged 25–34 are more likely than older generations to feel confident — or very confident — that they can remain financially stable while running an environmentally responsible business.
Seven in 10 (70%) SMEs have reduced waste by employing sustainable business practices, like increasing recycling or going paperless
Calderdale in Yorkshire and the Humber recycles, composts, or reuses 100% of its non-household waste – the highest rate in England - followed by Cheshire West and Chester (96.3%) and Shropshire (95.3%)
Top motivations for SME sustainable business strategies
| What are your top motivations for pursuing sustainability measures in your business? (Select up to 3) | ||
|---|---|---|
| 1 | Reduced costs (e.g., through improved energy efficiency and reduced waste) | 59% |
| 2 | Improved business reputation | 52% |
| 3 | Reduce environmental impact | 50% |
| 4 | Comply with regulations | 40% |
| 5 | Access to capital (e.g., through green investment initiatives | 29% |
| 6 | Investor / shareholder pressure | 12% |
| 7 | Other | 2% |
1. Almost three in five SMEs go green to save money
59% of SME survey respondents reported that cutting costs is one of the biggest reasons they adopt sustainability measures. Rising energy bills, raw material costs, and waste disposal fees have made efficiency a necessity.
Simple changes like switching to LED lighting, installing smart meters, or reducing packaging can bring down overheads while also shrinking a business’s carbon footprint.
2. More than half of SMEs want to build a stronger reputation with sustainability
More than half of SMEs (52%) view sustainability as a way to stand out. With more consumers choosing brands based on environmental credentials, it’s become a key part of marketing and brand identity.
Research found that one in three (30%) UK consumers have stopped buying certain brands due to sustainability concerns.
3. Half of SMEs want to make a genuine environmental difference
50% of SMEs are motivated by the environmental outcomes themselves. Many see their efforts as part of a collective push towards the UK’s net-zero goals, with small changes adding up to a big difference across industries.
Generational attitudes towards sustainability in business
Younger business owners, particularly those aged 25–34, show higher levels of confidence in running a profitable and environmentally responsible company compared with older age groups.
Over 91% said they’re either very confident or confident they’ll be able to remain financially stable while running an eco-friendly company, compared to 56% of business owners aged 45–54.
The youngest generation (25-34 years old), including Gen Z entrepreneurs, is also more likely to be motivated by improving their business reputation. Over two-thirds (69%) of this age bracket cited this as one of their top reasons for implementing sustainability measures, compared to an average of 45% of all other working generations (35-64 years old). On the other hand, reducing costs was the leading motivation for SME owners aged 35 to 64, cited by around 60% of respondents.
Barriers to sustainability in business and how to overcome them
| What are the top barriers to implementing sustainability measures in your business? (Select up to 3) | ||
|---|---|---|
| 1 | Lack of funding support | 44% |
| 2 | Unaffordable upfront cost | 38% |
| 3 | Lack of information / awareness | 36% |
| 4 | Issues in sourcing sustainable suppliers | 34% |
| 5 | Unaffordable upkeep costs | 32% |
| 6 | Lack of internal experience | 28% |
| 7 | N/A | 12% |
| 8 | Other | 1% |
1. Over two-fifths of SMEs say sustainability funding support is hard to find
Almost half of SMEs (44%) say one of the biggest roadblocks is not having the financial backing to get started. Many green projects require a cash injection before they start saving money.
While national funding can be limited, local initiatives are bridging the gap. One example is a scheme in Stoke‑on‑Trent and Staffordshire. As of February 2025, the local Green Solutions/Green Loan scheme offers businesses grant and borrowing options, as well as a free training course on running a sustainable business.
There are other financial options if grants or subsidies aren’t available in your local area. You could look at a business loan or business credit card if the repayments are comfortably covered by the savings you’ll make over time.
2. High upfront costs stop nearly two in five SMEs from implementing sustainable business strategies
For 38% of SMEs, the price tag on eco-friendly upgrades is one of the main reasons for holding back. Even when the numbers will work in your favour in the long run, it’s not always easy to part with a lump sum now.
Breaking projects into smaller, manageable phases can make them less daunting. Start with lower-cost changes like insulation or LED lighting before moving on to bigger investments such as electric vehicles or on-site renewable energy.
3. A lack of available information holds back sustainability in business
More than a third (36%) of SMEs said they don’t have enough information to take the next step in making their company greener. The good news is, there’s support out there. Government-backed tools like the UK Business Climate Hub are free to access and packed with practical advice to help you build a clear plan.
UK industries leading the way in sustainability
| Rank | Industry | Businesses concerned about the impact climate change may have on them | Businesses that have a climate change stratecy | Businesses that monitor climate-related risks | Businesses that have taken at least one action to reduce emissions | Sustainability action score /10 |
|---|---|---|---|---|---|---|
| 1 | Manufacturing | 29.6% | 4.4% | 8.2% | 75.1% | 7.9 |
| 2 | Accommodation and food service activities | 33.6% | 3.7% | 7.9% | 69.6% | 6.9 |
| 3 | Education | 28.1% | 7.4% | 6.9% | 64.1% | 6.7 |
| 4 | Wholesale and retail trade; repair of motor vehicles and motorcycles | 28.5% | 5.0% | 5.7% | 66.3% | 6.3 |
| 5 | Arts, entertainment, and recreation | 39.9% | 6.4% | 4.1% | 52.6% | 5.8 |
| 6 | Information and communication | 21.1% | 5.6% | 7.8% | 63.1% | 5.6 |
| 7 | Professional, scientfic, and technical activities | 23.8% | 5.0% | 7.2% | 55.7% | 5.4 |
| 8 | Human health and social work activities | 4.5% | 12.0% | -% | 74.6% | 5.0 |
| 9 | Real estate activities | 17.5% | -% | 8.0% | 64.1% | 4.0 |
| 10 | Administrative and support service activities | 20.3% | 4.9% | 2.3% | 53.3% | 3.1 |
1. Manufacturing is driving change through innovation
The manufacturing industry is taking the most action to increase sustainability, with a score of 7.9 out of 10. This strong performance is driven by the high share of manufacturers taking practical steps to cut emissions.
This could include upgrading to energy-efficient machinery, improving production processes to reduce waste, and switching to renewable energy. Regulatory pressures are also a factor, pushing manufacturers to innovate in order to stay compliant.
For example, the Extended Producer Responsibility (EPR) scheme shifts the cost of collecting and recycling packaging waste from councils to producers. It has the biggest impact on packaging-heavy sectors, including manufacturing, where firms are now redesigning products and materials to meet stricter recycling rules.
2. Hospitality shows strong action on climate concerns
Scoring 6.9, accommodation and food service is in second place in our sustainability action ranking, with businesses showing both high climate concern (33.6%) and a strong record of taking steps to cut emissions (69.6%).
While the ONS data tracks what’s being done, other research helps explain why. One report found that over four in 10 (45%) UK consumers expect sustainable products and services to be the default.
This may also be because the nature of the hospitality sector means there are lots of tangible, relatively simple changes that can be made. These can include cutting food waste, switching to sustainable packaging, and sourcing locally.
3. Education embeds sustainability in daily operations
The education sector comes in third with a score of 6.7. Like manufacturing, its strong performance is mainly down to the fact that over three-quarters (76.4%) of institutions have already taken steps to cut emissions.
This figure is likely linked to sustainability becoming a growing priority across the education system, with public schools and colleges under pressure to cut energy use, modernise estates, and align with government net-zero targets for the public sector.
Government-backed schemes are also helping schools make changes. For example, the Great British Energy initiative is funding solar panel installations across hundreds of schools, reducing running costs while cutting emissions. This type of support makes it easier for the sector to embed sustainability into everyday operations and meet long-term net-zero goals.
UK industries driving innovation in sustainable business strategy
Manufacturing leads the charge on green innovation, taking four of the top five spots of sectors with the highest rate of businesses driving green innovation.
| Rank | Sector | % of businesses with any green innovation (IWEB) |
|---|---|---|
| 1 | Manufacture of fuels, chemicals, plastics, metals, and minerals | 67.2% |
| 2 | Architectural and engineering activities and related technical consultancy | 65.8% |
| 3 | Manufacture of transport equipment | 63.5% |
| 4 | Manufacture of computer, electrical, and optical equipment | 62.2% |
| 5 | Manufacture of food, clothing, wood, paper and printing | 61.7% |
Manufacturing sectors could feel the most gains from environmental upgrades. Swapping energy-hungry machinery for efficient alternatives or cutting waste in production can have measurable impacts on long-term profits and energy use.
The UK industries investing the least in green innovation
| Rank | Sector | % of businesses with any green innovation (IWEB) |
|---|---|---|
| 1 | Advertising and market research | 32.4% |
| 2 | Publishing, computer programming & information service activities / ICT | 33.9% |
| 3 | Real estate activities | 37.6% |
| 4 | Technical testing and analysis | 37.8% |
| 5 | Financial and insurance activities | 38.5% |
Less than one-third (32.4%) of advertising and market research companies say they’ve invested in environmental innovations. As this sector can play a big role in shaping consumer behaviour, there’s scope for firms to adopt greener practices and use their influence for good.
Of course, some sectors have more opportunities to make high-impact changes than others. For example, companies operating in manufacturing and construction typically have far greater day-to-day environmental footprints than those in advertising and other administrative sectors.
While the scope for change can be smaller for these types of industries, firms can still strengthen their green credentials and demonstrate leadership in shaping more sustainable consumer behaviour.
Sustainable business practices SMEs are using to go green
| What steps have you taken to reduce your environmental impact? (Select up to 3) | ||
|---|---|---|
| 1 | Reduced waste (e.g, more recycling / going paperless) | 70% |
| 2 | Sustainable supply chain management (e.g, sourcing more materials locally) | 38% |
| 3 | Made products more eco-friendly / introduced new eco-friendly products | 34% |
| 3 | Introduced eco-friendly packaging | 34% |
| 5 | Optimised logistics for sustainability (e.g., efficient delivery routes / electric or hybrid transport vehicles) | 30% |
| 6 | N/A | 10% |
| 7 | Other | 1% |
The top actions include:
Waste reduction – Over two-thirds (70%) of SMEs said they’ve focused on cutting waste, from recycling schemes to going paperless.
Sustainable supply chains – Almost two-fifths (38%) are sourcing materials locally or reviewing supplier practices to reduce environmental impact.
Eco-friendly products and packaging – More than a third (34%) of SMEs have introduced greener products or packaging to appeal to changing customer expectations.
Many new, dedicated SMEs have been founded to help with these changes. For example, Stroodles makes edible wafer coffee cups and tableware, while Notpla creates plant-based packaging for a range of everyday items like food containers and sachets.
English regions where businesses recycle the most
| Rank | Local authority | Region | Total non-household waste (tonnes) | Non-household waste sent for recycling, composting, or reuse (tonnes) | Non-household waste sent for recycling, composting, or reuse (tonnes, %) |
|---|---|---|---|---|---|
| 1 | Calderdale | Yorkshire and Humber | 946 | 946 | 100.0% |
| 2 | Cheshire West and Chester | North West | 7,566 | 7,284 | 96.3 |
| 3 | Shropshire | West Midlands | 8.414 | 8,018 | 95.3% |
| 4 | Swindon Borough Council | South West | 80,80 | 7,477 | 92.5% |
| 5 | Gloucestershire County Council | South West | 11,865 | 10,794 | 91.0% |
| 6 | St Helens MBC | North West | 5,288 | 4,758 | 90.0% |
| 7 | Medway Borough Council | South East | 3,835 | 3,445 | 89.8% |
| 8 | Bath and North East Somerset Council | South West | 6,206 | 5,559 | 89.6% |
| 9 | South Gloucestershire Council | South West | 4,622 | 4,129 | 89.3% |
| 10 | West Berkshire District Council | South East | 2,038 | 888 | 85.6% |
Calderdale has the highest commercial recycling rate in England, with all non-household waste recorded as recycled, composted, or reused. However, this local authority produces far less non-household waste than other top-ranking authorities.
While local authorities in the South West aren’t in the top three, the region accounts for 40% of the top 10 authorities, while the North West and South East place two each.
London, Scotland, and West Midlands firms lead on green confidence
According to our survey insights, London, Scotland, and the West Midlands have the highest rate of SME owners who can confidently say their businesses will be able to remain financially stable while still implementing eco-friendly practices – around 84% in each region.
Whereas business owners in the South East, Wales, and Yorkshire and the Humber are more dubious, with only around 57% on average confident they could balance the two in these regions.
The South East and Wales are also the two least confident regions in being able to contribute meaningfully to meeting the UK government’s climate targets of halving greenhouse gas emissions by 2030 and achieving net-zero by 2050.
How business owners can utilise responsible lending to improve their sustainability
One of the biggest hurdles for SMEs wanting to go green is covering the upfront costs. Responsible lending provides a solution, allowing businesses to invest in sustainable changes now and repay gradually, without jeopardising financial stability.
Spreading costs through a business loan makes upgrades more manageable, while the savings from energy-efficient systems can quickly outweigh the repayments. For example, installing energy-efficiency measures can cut energy bills by thousands each year for SMEs.
Extra support for green business investment
Alongside responsible lending options, there are also government-backed schemes designed to make sustainability upgrades more affordable:
Boiler Upgrade Scheme (BUS) – Offers grants of up to £7,500 to help small businesses and property owners switch to low-carbon heating systems, such as heat pumps.
Green Business Loan Scheme – Gives Welsh businesses tailored support to cut carbon emissions while lowering their future energy costs by offering loans with discounted interest rates and flexible repayment dates.
Local and regional schemes – Many councils offer funding to help small businesses go green. The options differ depending on where you’re based, so check your local authority’s website or use the Find a Grant tool to see what support is on offer.
Sources and methodology
Sustainability commitment by sector
We used the business insights and impact on the UK economy from the ONS Business Insights and Conditions Survey to rank industries on the percentage of businesses that:
Are concerned about the impact climate change may have on their business (sum of those who answered either “Yes, very concerned”, or “somewhat concerned”)
Have a climate change strategy
Monitor climate-related risks
Have taken at least one action to reduce their carbon emissions (percentage who didn’t answer “No actions have been taken to reduce emissions”)
-% represents data that has been removed for confidentiality reasons, such as percentages less than 1%, breakdowns with a count of 10 or fewer, and breakdowns with a micro business count between 1 and 10 (a micro business has fewer than 10 employees).
Industries investing in green innovation
We used the Department for Business and Trade’s UK Innovation Survey 2023 to show the percentage of businesses in each industry that have invested in innovations with environmental benefits (IWEB).
Regional business recycling rates
We use the Department for Environment, Food & Rural Affairs’ local authority collected waste management - annual results to divide non-household waste sent for recycling, composting, and reuse by non-household total waste to calculate the recycling rate by local authority.
NOTES:
Councils with no data were removed
Some councils were showing >100% - these have been removed
SME survey
We surveyed over 500 UK SME owners about sustainability, asking for their top motivations for, actions taken, and barriers to implementing sustainability measures.
We also asked about how confident they are in their ability to remain financially stable while being environmentally responsible, and in contributing meaningfully to the UK government’s climate targets of halving greenhouse gas emissions by 2030 and achieving net-zero by 2050.
About Joe Phelan
Joe is an experienced writer, journalist and editor. He has written for the BBC, National Geographic, the Observer, Scientific American and VICE. As a business expert, his work frequently spotlights the ventures and achievements of small business owners.