Why councils must support SME’s sustainable strategies

Why Councils Must Support SME’s Sustainable Strategies‍

Councils are waking up to the dual challenge of climate action and local economic vitality but too often these agendas run in parallel, not together. Frame sustainability as just a compliance box or environmental initiative, and you miss the bigger win: supporting local SMEs to grow, thrive, and future‑proof their operations.

SMEs: Small in scale, massive in impact

SMEs make up 99.8% of UK businesses, yet collectively contribute an estimated 43–53% of UK business greenhouse gas emissions. They employ a significant proportion of the workforce and shape local economies. Although individual SMEs may seem small, together they drive nearly half of all business emissions. That makes their transition critical, not just for carbon reduction, but for economic resilience too.

What barriers do SMEs face?

A UK Finance‑commissioned report “Unlocking the SME Net Zero Transition” found that SMEs overwhelmingly lack time, capacity, capability and reliable information to act. Many business leaders feel too small to make a difference, and the effort isn’t always seen as worth it. Similarly, research by Small Business Britain shows that 38% of small businesses see sustainability as an additional cost, even though 25% believe it can generate savings. Most sustainability projects are self‑funded, highlighting a need for more formal support structures.

Furthermore, nearly half of SMEs struggle with poor carbon data, especially for Scope 3 emissions, due to unreliable reporting from suppliers and tech vendors. Without trustworthy data, they can’t build investor or customer confidence, or comply with future disclosure rules.

Why councils should act and how

1. Connect council ambition to a local low‑carbon economy

Over 300 councils in the UK have declared a climate emergency yet far fewer translate this into a tangible local economic strategy. Councils wield levers such as procurement, grants, business rates relief, land‑use zoning and soft‑incentives (like advice centres) that shape the local supply chain. By embedding sustainability criteria in council contracts and procurement processes, councils can stimulate demand for low‑carbon goods and services from local SMEs, supporting growth.

‍2. Offer targeted support, not generic information

SMEs want practical, finance‑backed help, not more websites. UK Finance and the Federation of Small Businesses have called for £5 000 “Help to Green” vouchers to support SMEs to invest in energy‑saving equipment, offsetting upfront costs and unlocking further investment. Local authorities can pilot or co‑fund such voucher schemes, or facilitate low-cost retrofit loans, leveraging partnerships with British Business Bank or regional development agencies.

SMEs show a strong preference for local grants, training and tax relief to get started on sustainability, especially where national schemes feel opaque or overwhelming.

‍3. Build networks and champions through local platforms

Councils already run Business Improvement Districts (BIDs), business networks and climate forums where local SMEs gather. These platforms are perfect for spotlighting sustainability case studies, offering peer‑to‑peer knowledge, and raising awareness of “green growth” support. Case study data from the Willow Review showed 67% of SMEs adopting sustainability practices saw reduced operating costs and over half gained new customers and improved loyalty.

Councils can elevate green champions, SMEs that have made successful transitions, and create visible pathways for others.

‍4. Bridge digital and green divides

In England, faster broadband boosts the local business creation rate, just a 1% increase in download speed corresponds to a 0.057 percentage point rise in business growth. Digital infrastructure enables SMEs to deliver new sustainable and innovative models, e‑commerce, remote services, and platform‑based solutions. Councils investing in next‑generation broadband or co‑operating on digital inclusion, therefore also invest in enabling new green‑enabled SMEs.

‍5. Anchor climate ambition in local economic departments

Too often sustainability is siloed inside environmental teams. Repositioning sustainability as a supply-chain and economic growth issue, rooted in business support, planning, and regeneration teams, gives it traction with economic development, regeneration, and SME units. This shift turns carbon goals into strategic economic levers.

‍The triple dividend: climate, economy, community

When a council helps a local café switch to low‑carbon heating, or a micro‑manufacturer adopt energy efficiency, the benefits multiply:

• For SMEs: lower utility bills, improved reputations, new customers, and resilience to climate and regulatory shocks.

• For councils: deeper local sourcing, stronger retention of business rates, enhanced profile, and alignment with both economic and net‑zero agendas.

• For communities: jobs, investment, and visible innovation within familiar names and local anchors.

In council strategy terms, prioritising a local low‑carbon chamber of SMEs makes sustainability both a climate and growth instrument not an optional add‑on.

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Call to leadership

Councils that merely comply with national carbon targets are missing the local opportunity. But those that leverage sustainability as economic stimulus, actively engaging SMEs, funding pilot green investments, and aligning procurement, doubly invest in climate and local prosperity.

Ultimately, SMEs are not just part of the net‑zero equation. They are the main engine of it. Councils that recognise this will not only meet environmental targets, they’ll anchor local economies in resilience, growth and innovation.

Councils must elevate sustainability from an environmental objective to a strategic economic tool. That shift unlocks real value, for local businesses, local jobs and local communities.

We run a Sustainability Workshop specifically for councils to help you start the process of unlocking sustainability for SME growth. Get our overview today - or reach out to book a session today.

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