UK SMEs are central to the green transition, but green job targets may fall short. The Tony Blair Institute urges proactive climate resilience, innovation funding, and stronger ESG focus, as SMEs and employees increasingly prioritize sustainability, collaboration, and purpose over profit.
— As the UK navigates its transition to a greener economy, small and medium enterprises (SMEs) are increasingly at the forefront of shaping a sustainable future. However, according to a new report from the Tony Blair Institute for Global Change, the ambitious target of creating 650,000 green jobs, as outlined by Labour’s Net Zero Chief Ed Miliband, may fall short of expectations. Current trends suggest that the UK is more likely to create only 350,000 green jobs, with the goal of reaching 425,000 green manufacturing roles by 2050 possibly taking up to three decades to achieve.
Proactive Economic Resilience Required
The Tony Blair Institute urges political leaders to shift their focus from reactive disaster management to proactive climate resilience. “Political leaders need a new approach to climate resilience and adaptation – one that prioritises economic resilience, integrating climate preparedness into the heart of economic strategy,” says the report. The institute highlights the importance of innovative financing mechanisms to support adaptation projects, helping reduce the financial burden that has traditionally fallen on the public sector.
As businesses continue to adopt green business models, the research shows that 78% of SMEs view sustainability as a top priority. The British Business Bank reports that 71% of SMEs have already taken steps to become more environmentally sustainable, with 88% using internal funding to drive their green business initiatives. These efforts represent a growing commitment among SMEs to contribute to the UK’s Net Zero goals.
The Importance of Government Support for Innovation
At the heart of the green business movement, entrepreneurs are calling for further support for innovation. Founders of successful climate startups are advocating for the renewal of the Net Zero Innovation Portfolio (NZIP), a scheme introduced in 2020 ahead of COP26. Over the past four years, the portfolio has invested over £1 billion in green technologies, ranging from carbon removal to EV charging infrastructure. Startup Coalition’s analysis suggests that for every £200-£300 million allocated to startups, £500 million in private investment has been returned, making the case for continued government backing.
The ESG Dilemma: Balancing Profit with Purpose
Despite the growing focus on sustainability, the issue of Environmental, Social, and Governance (ESG) has been slipping down many corporate agendas, with potential negative consequences for workforce relationships. Matt Weston, Senior Managing Director UK & Ireland at Robert Half, warns that neglecting ESG commitments can harm employee engagement and talent retention.
Research shows that nearly half (47%) of workers now care more about their employer’s environmental impact than they did three years ago, with 60% of employees stating that organizations need to do more to address ESG issues. Furthermore, 67% of workers believe businesses have a responsibility to reduce their environmental impact. Notably, this shift is not confined to younger workers, with 61% of those aged 35-54 also stating that companies need to do more.
Weston comments, “If companies fail to prioritize ESG, they risk alienating their workforce. Employees increasingly value businesses that balance profit with purpose. In a competitive job market, this can have long-term consequences on talent acquisition and retention.”
Interestingly, 61% of workers say they would consider company values when deciding between two employers offering the same pay, with 47% indicating they would factor in a company’s ESG efforts. The research underscores the growing importance of ESG as a decision-making criterion across all age groups.
A New Mindset for SMEs: Purpose Above Profit
As SMEs continue their journey towards a greener future, the next phase of the SME Barometer shows a significant shift in priorities. In the face of volatile economic challenges, SMEs are being urged to adopt a mindset that places purpose above profit. Those that embrace this shift will find themselves accelerating innovation, inspiring employees, and building stronger customer and brand loyalty. In turn, this will not only boost their competitive advantage but also enhance their bottom line.
Looking Ahead: A Collaborative Effort
As SMEs navigate this volatile landscape, it is clear that their ability to thrive in a green economy will depend on collaboration—across industries, with government authorities, and within the business community itself. Leaders in the SME sector are calling for continued investment in green technologies, sustainable practices, and a commitment to ESG principles. With the right strategy and support, SMEs can play a pivotal role in driving the UK’s green transition while securing their long-term success.
About the company: About The SME Barometer:
The SME Barometer is a leading research initiative that tracks the sentiment, challenges, and opportunities facing small and medium enterprises across the UK. With a focus on innovation, sustainability, and business resilience, the Barometer provides valuable insights into how SMEs are adapting to a rapidly changing economic and environmental landscape.
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