Most small and medium-sized businesses remain unprepared for new sustainability reporting standards, with just 13% judged to be on track to reach net zero, according to research by Aldermore.

The study found that progress on decarbonisation has stalled, with no improvement since 2024, despite the UK Sustainability Reporting Standards set to come into effect from 2026 for some companies.

LACK OF ACTION

A quarter of SMEs are reviewing their environmental goals, but 76% have yet to act. Almost two-thirds have never heard of Scope 1, 2 or 3 emissions, the measures at the heart of the incoming framework.

The research suggests many businesses see the shift as a burden, with 82% saying sustainability requirements pose a barrier. However, respondents also estimated that adopting greener practices could boost annual income by more than £52,000.

On average, SMEs reported spending £5,566 investigating sustainable practices and £23,715 implementing them.

Lauren Pamma, head of energy and infrastructure at Aldermore, said: “Our research shows genuine ambition among SMEs to decarbonise, but a lack of knowledge, resource and access to capital is holding many back.

“With reporting deadlines approaching, now is the time for government, industry and finance partners to step up their support.”

She added that closing the skills gap and providing targeted funding would help firms unlock growth, energy security and cost savings.

Aldermore said it is working with businesses to finance the transition, highlighting its recent £25m funding package for Osprey Charging Network to accelerate the roll-out of electric vehicle charging hubs.