This UK study examines the role of finance systems in changing business behaviour to reach Net Zero and Nature Positive environmental goals. Attention is on SMEs (<250 employee firms), which make up the vast majority of UK businesses and also contribute to a majority of pollution. The project anticipates the increasing financial reporting requirements of environmental impact performance by larger businesses in the UK and the likely supply chain impacts that this will have on SMEs.
Greater understanding is required for how net zero and nature positive impacts by SMEs will be reported to investors and large businesses with SMEs in their supply chains. SMEs face challenges of newness and smallness, with less access to finance and fewer resources, that impinge on their ability to report on their biodiversity and carbon risks. Yet, SMEs can be nimble and provide the innovative source of forward-looking, purposeful and alternative business models that can create a nature positive future. However, there is a risk that the challenges facing SMEs may dissuade investors from investing in them, at a time when innovations to tackle biodiversity loss are needed most.
This transdisciplinary study involves core ecological, SME accounting and finance and sector academic specialists alongside public and private financial institutions, policymakers and relevant SME support organisations.
The project embeds practitioners with academic research to offer effective pathways to practical policy support and academic entrepreneurial finance insights to deliver effective nature positive solutions, including reports, policy briefings and investment toolkits for 4 high priority environmental impact sectors: agrifood, infrastructure (construction and transport), manufacturing and technology, sustainable fashion.
This SME Nature Positive Finance project follows on from an earlier NERC-funded project SME Financing for Biodiversity: Building Nature Measurement and Impacts into SME Financing (‘SME FinBio’). It forms part of an ongoing three-year Middlesex University research programme (2022-2024) on SME Nature Positive Finance and the financing of SME Biodiversity innovation and business model changes (‘FinBio’): Click on the SME FinBio link to find out more about this project and our outputs (including a toolkit support for financiers and SMEs to support environmental measurement and policy recommendations).