London-wide programme needed to help small businesses adopt energy saving measures – MDX report

Less than 1% of the UK’s five million small businesses have accessed public green energy schemes to help them reduce emissions

A London-wide support programme is needed to help the capital’s almost one million small and medium-sized enterprises (SMEs) reduce emissions and become more environmentally friendly, according to new research led by Middlesex University.
London’s small businesses want to adopt energy saving measures but the existing programmes to help them transition into sustainable green businesses are largely “small scale and unevenly delivered” limiting their impact, the report found.
These findings have been produced as part of London Councils’ Green Economy Programme chaired by the London Borough of Hounslow and are based on a three-year research project led by academics from the Centre for Enterprise, Environment & Development Research (CEEDR) at Middlesex University, working with researchers from Kingston University and Royal Holloway.

Defined as businesses with 250 employees or fewer, SMEs account for 99% of all UK businesses but less than 1% of the UK’s five million SMEs have accessed public green energy support schemes. Drawing on extensive in-depth interviews with borough councils, finance providers, and SMEs, the research identifies persistent barriers including poor access to finance, complex and bureaucratic grant processes, and shortages in green skills – particularly in retrofit and energy auditing – as well as limited knowledge and access to information on how to help towards the UK’s goal to achieve net-zero greenhouse gas emissions by 2050. As most SMEs operate as tenants, landlord-tenant constraints further restrict their ability to invest in solar panels, insulation, LED lighting, or heat pump systems. 

While praising various initiatives in London including the South London Partnership’s retrofit skills centre, the report highlights a wider lack of large-scale, coordinated public and private schemes. The report sets out a series of recommendations, including:

• The establishment of a London-wide ‘one-stop shop’ SME Green Support Programme with simplified grants and embedded sustainability expertise
• Improved access to finance through targeted subsidies and incentives
• Help SMEs access shared space and improve landlord-tenant retrofit partnerships with incentives
• Expanded training to address critical skills gaps in renewable energy and building decarbonisation

Dr Patrick Elf, Associate Professor in Sustainable Business at Middlesex University and co-lead of the research, said: “London’s SMEs are central to net zero goals because they form the backbone of our local economies, supply chains and high streets. Yet our research shows that many businesses face a landscape of short-term schemes, complex funding processes and unclear pathways. What is needed now is coordinated, long-term support—where sustainability advice is embedded into standard business services, where finance is accessible rather than prohibitive, and where retrofit and green innovation are treated as mainstream economic priorities rather than niche add-ons."

“The opportunity is enormous. Demand for sustainable goods and services is rising, London has a vibrant entrepreneurial business environment, and many SMEs are ready to act. With the right mix of governance, investment and policy, London’s SMEs can not only adapt to the transition into a green businesses economy but actively drive it — creating jobs and delivering social and environmental benefits well beyond the capital.”

Dr Patrick Elf, Associate Professor in Sustainable Business

Steven Wilding, Head of Net Zero at Hounslow Council, said: “This research will help us understand business support activities that work best, to support SME decarbonisation and growth. The comprehensive report focuses on understanding the challenges to bridge the gap between delivery and take-up of financial support for SMEs and makes the case for coordinated action across London.”

Find out more about the work on Driving London's Green Business Transition and the work of CEEDR. Photo of Leicester Square by Luca Vavassori on Unsplash.