Small manufacturing businesses keep sustainability agenda despite serious pressures

At a time when sustainability commitments are coming under pressure across some of the UK’s biggest businesses, small businesses in the manufacturing sector are holding firm. New research from Novuna Business Finance finds that despite the worries over rising inflation, energy prices and supply chain disruption, many manufacturing small businesses remain committed to making practical progress on sustainability in 2026.

The Novuna Business Finance research points to a manufacturing sector where sustainability is becoming more practical and commercially focused. More than a third of manufacturing SMEs said they now do more practical steps with sustainability on a day to day basis, compared with when net zero targets were announced in 2019 (36% versus 29% nationally). Furthermore, 22% of manufacturing small business owners say sustainability is now more strategically embedded in their business culture today, with work guided by a clear plan.

The research also suggests manufacturers are responding to the sustainability expectations of the businesses and consumers closest to them. Customers were the biggest influence encouraging manufacturers to take sustainability seriously, cited by 33% of firms in the sector compared with 28% nationally. Business partners were also a stronger influence for manufacturers than for small businesses nationwide (30% versus 20%).

When asked which areas of sustainability had become more important over the last year, manufacturing small businesses were more likely than the national average to highlight reviewing energy usage across premises – including water use, heating and renewable energy (23% versus 14% nationally). Waste, recycling and packaging also remained high on the agenda, mentioned by 32% of manufacturing small businesses, while 32% also cited having a positive social impact in their immediate community.

However, the research indicates that some manufacturing small businesses want clearer evidence and practical support before they can turn good intentions into action. Almost a third said understanding the tangible cost saving benefits of becoming more sustainable would help them take more practical steps (32% versus 23% nationally). Manufacturers were also more likely than average to say they would benefit from learning more about flexible asset finance and funding options (23% versus 18% nationally), and from understanding whether greener action could help them win more business or customers (25% versus 19% nationally).

Jo Morris, head of insight at Novuna Business Finance, commented: ‘At a time when some larger organisations are scaling back their sustainability commitments, our research shows that the SME community is becoming the business flag carriers for net zero, energy efficiency and a range of other sustainable business practices. Further, many small manufacturing businesses still see sustainability as relevant, practical and increasingly connected to the expectations of their customers and business partners.

‘This commitment towards sustainability comes at a time when many small businesses are coping with serious market pressures. Our research found that manufacturers were more likely than the national average to cite worries over rising inflation and the prospect of interest rate hikes (45% versus 32% nationally), while 39% pointed to the challenges of rising energy costs (compared with 32% nationally). As sustainability becomes more deeply embedded in organisational culture, evidence suggests small businesses are sticking to these commitments through the highs and lows. With the current soaring of energy prices, now is a good time to consider alternative and renewable energy options – and also to assess the cost savings and lower energy bills that can result from modernising equipment.

‘Overall, the opportunity for the manufacturing sector is to make sustainability more achievable and impactful to the bottom line. That means better evidence on where the real savings lie, and the right support to help firms invest in greener, more efficient equipment and processes. What this data shows is that small manufacturers stay close to the expectations of their customers and communities, and that closeness turns out to be one of the most reliable drivers of practical change.’