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SMEs delay green investment as costs rise

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  • 80% of SMEs view sustainability a priority, but only 43% currently consider themselves to be green at present
  • Concerns over cost and uncertainty over government legislation cited as leading reasons
  • Two out of five SMEs view going green as a competitive advantage over competitors
  • The research by Paragon Bank found that only 5% of SMEs were not open to becoming greener
  • Range of financing available to SMEs looking to invest in sustainability 

A majority of SMEs are delaying improving their sustainability, new research has found.

Commissioned by Paragon Bank the research found that while 80% of SMEs viewed becoming more sustainable a priority in the next five years only 43% of firms at present considered themselves to have implemented practices to become green.

Only 5% were resistant to adapting greener working practices.

Concerns over understanding and implementing government legislation and the additional costs of acquiring new equipment were as cited reasons for businesses not yet implementing further sustainability measures – with 79% lacking a detailed understanding of how legislation applies.

Almost 50% of SMEs cited equipment costs as a reason for not yet doing so, compared with 31% that considered introducing more sustainable practices as a cost-saving measure. 

The research also found that the agriculture and transport businesses were most likely to consider themselves sustainable, with 73% and 48% respectively. 

Manufacturing and construction were least likely to do so, with 37% of manufacturing firms considering themselves to have gone green – and only 25% in the construction sector.

Business reputation was recognised by those surveyed as being a key reason for implementing sustainability practices, with 61% citing it as a benefit – with 38% also arguing that doing so would provide them with a competitive advantage.

Commenting on the findings and the availability of financing to SMEs looking to adopt more sustainable practices John Phillipou, Director of SME at Paragon, said:

“Making a business environmentally sustainable is a process, not an event. While our research findings demonstrate that a substantial majority of SMEs recognise the benefits to their businesses of becoming greener, there are still significant challenges in front of them if they are to meet their goal.

“For sectors reliant on heavy machinery and vehicles investing in newer, greener models is a costly decision – especially in a time of high-inflation. Supply chain issues have also impacted the availability of new, greener technology and pushed up the price of second-hand green alternatives.

“Financial support is however available for companies seeking to finance purchases to help further their green priorities and looking into those options is an important first step in making that change, and we are keen to support them in doing so.”

For further information contact:

Tom Frew
Media Relations Manger
E: [email protected]


Notes to editors:

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £13 billion of assets under management and manages over 450,000 customer accounts.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ.