Sustainability equals survivability for UK SMEs: why environmental, social, and governance (ESG) must be a priority

30 July 2025

Sustainability is no longer just a buzzword. For small and medium enterprises (SMEs), it’s quickly becoming a vital way to future-proof your business. With SMEs making up 99.8% of UK businesses and employing 60% of the workforce (BEIS, 2023), the way your business approaches sustainability really matters — not just for you, but for the wider economy too.

Recent challenges put ESG in the spotlight

Extreme weather events such as floods and storms have made climate resilience a top priority. Alongside the energy crisis and rising costs, energy efficiency and sustainable resource management are more important than ever for SMEs managing their overheads. With COP30 on the horizon, global ESG policies are set to speed up, so there’s no better time to act.

Pressure to adopt environmental, social, and governance (ESG) principles is coming from all sides — customers, investors, regulators, and increasingly from those assessing tenders. The message is clear: putting ESG at the heart of your business is essential if you want to stay competitive and build lasting resilience.

What sustainability really means for UK SMEs

At its core, sustainability through ESG means managing your environmental impact, social responsibilities, and governance practices in a way that supports your business’s long-term success. It’s about weaving these principles into your everyday operations so you can meet rising expectations while reducing risks. This isn’t just about doing good — it’s about doing well, helping your business thrive no matter what comes your way.

Customers are choosing businesses that genuinely care

People’s buying habits are shifting. Over half of UK shoppers (54%) say they prefer brands that truly care about people and the planet (GlobalData Consumer Survey, 2023). For SMEs, being open and responsible is more than a box-ticking exercise. It’s about building trust, winning loyalty, and growing your business steadily over time.

Investors are paying close attention to ESG

It’s not only customers who are watching. Around 72% of UK investors now consider ESG when making decisions (Schroders Global Investor Study, 2023). Without a clear ESG commitment, your business might miss out on vital funding or partnerships. ESG goes beyond good optics, signalling stability and long-term growth potential.

Regulations and tender rules are evolving fast for SMEs

While many SMEs don’t yet have to report formally on ESG, that’s changing soon. The UK government plans to broaden ESG reporting requirements to smaller businesses (UK Department for Business and Trade, 2023). Tender eligibility remains a key entry point, but now up to 10% of some government tender assessments focus on social value and supply chain contributions. Beyond compliance, ESG is a commercial advantage that can help you win contracts and build stronger partnerships.

The real benefits of prioritising ESG for your business

We know SMEs have unique challenges, which is why ESG frameworks designed just for you are so important. They focus on what really matters without overwhelming complexity. The benefits are clear: compliance helps you avoid risks; better governance protects your reputation and supply chains; improved efficiency cuts costs; and strong ESG commitments open doors to investment and lower funding costs. Meeting customer expectations builds loyalty and boosts sales. Brand and shareholder trust become real assets, and without them, your business risks losing ground. Plus, solid sustainability principles help attract and keep employees who increasingly expect businesses to share their values.

How to start or speed up your ESG journey

Starting or stepping up your ESG efforts might feel overwhelming, but practical steps can get you moving. Begin with an honest audit of your current practices. For example – do you use renewable energy within your business or a have supplier code of conduct? This exercise can help you figure out what really matters to your business and your stakeholders. This keeps your focus sharp, uncovering risks and opportunities while aligning with regulations.

Certification frameworks like ESGmark® provide a clear path, helping you set measurable goals, such as cutting your carbon footprint, and track progress transparently. Sharing your journey openly builds trust with customers, investors, and partners. Most importantly, embedding ESG into your everyday work — from procurement and energy use to employee wellbeing and governance — means sustainability becomes second nature.

By putting ESG at the heart of your strategy, you’re not just responding to outside pressure — you’re actively building a stronger, more adaptable business ready for whatever comes next. The world is moving toward higher ESG expectations, and starting today means your business is better placed to thrive tomorrow.

How ESGmark® can help

At ESGmark®, we specialise in supporting organisations to credibly demonstrate and improve their ESG credentials through certification, carbon footprint analysis, and consultancy services. The ESGmark® Certification is awarded to organisations that demonstrate strong ESG credentials, allowing stakeholders to identify those that act to deliver a fairer, more sustainable future. Our community members enjoy trusted recognition, expert support and resources to help them continue their ESG journey, as well as access to a thriving community with events, networking opportunities, and member-to-member offers.

If you want to explore how we can support your journey, reach out to us at kayla.ellis@esgmark.co.uk or download our information pack here.

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