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The government will provide £2 million to a scheme that helps manufacturing SME in England to become more productive, energy efficient and sustainable through the use of technology.
The announcement is part of the Department for Business and Trade’s response to the Willow Review, an independent report by Small Business Britain and Barclays that made recommendations to boost the sustainability of small businesses.
The funding will go to the Made Smarter Adoption Programme, which provides guidance to manufacturing and engineering businesses on investment in technology in areas like heating, insulation and solar power.
Willow Review sustainability for SMEs recommendations
The report said a wider campaign is needed to encourage small businesses to take advantages of existing resources on how to be more sustainable.
In its response, the government said it is giving the UK Business Climate Hub £200,000 to make updates to its website and prepare for further integration with the government’s new Business Growth Service.
The Department for Business and Trade also intends to publish new guidance on climate adaptation tailored to SMEs at different stages of the business growth journey by the end of 2025.
The report said access to finance for sustainable improvements need to be improved.
The government said: “Low demand for green finance is driven by a perceived lack of financial return for borrowers. Some decarbonisation technologies have poor payback periods and thus have a weaker return on investment compared to other possible interventions, particularly given the relatively high cost of finance.
“We need to demonstrate and evidence a compelling case to induce the market to create deals, incentives and structures that allow businesses to realise a good financial return on investment.
“The British Business Bank’s pilot Green Growth Guarantee Scheme seeks to do this by addressing high costs arising from the relative immaturity of the market for second hand green assets.
“We will work with stakeholders to understand in more detail the financing options available to SMEs, their approach to taking on debt, and any barriers they face. We can learn from other schemes delivered in Scotland, Wales and some local authorities which provide different models of funding.”
The report also said SMEs struggle to get hold tax relief and other incentives to improve sustainability and access should be improved.
The government response said: “It is important that we fully understand the financial challenges SMEs face in investing in energy efficiency measures and how government can better enable SMEs to benefit from existing fiscal incentives.
“We need to build up an evidence base so that we can understand options for taking action. If the evidence suggests that current schemes are hard to navigate or underutilised, we will consider what we can do to improve SME experience and access.”
Katie White, minister for climate, said:
“Clean energy is the economic opportunity of the 21st century and we are ensuring small business have the tools they need to take advantage of clean technologies and energy efficiency.
“The Willow Review recommendations will help the small businesses that power Britain unlock the financial benefits of sustainability, as we accelerate towards net zero.”
