SMEs support staff and sustainability amid cost pressures

UK small and medium-sized enterprises (SMEs) are stepping up for both their employees and the environment, despite continuing economic challenges. According to new research from Purbeck Insurance Services, over half (51%) of SMEs have provided financial support to staff during the ongoing cost of living crisis, while 64% are actively working to reduce their carbon footprint.

The findings come as the UK prepares to mark World Environment Day on June 5th, underscoring the increasingly strategic role SMEs are playing in supporting social and environmental resilience.

As inflation and rising household costs strain workers across the UK, SMEs are taking action. Among those offering financial help, nearly half have either reviewed salaries or issued cost of living bonuses. These actions come at a time when only a third of Britons consider themselves financially comfortable, according to recent YouGov data.

Beyond employee welfare, SMEs are increasingly embedding sustainability into their business models. Purbeck’s survey reveals that 64% are pursuing measures to cut their carbon footprint – an effort most prevalent among business leaders aged 25-34.

“It’s great to see that many UK small businesses are taking practical steps towards decarbonisation, while also looking after their employees, even though they are facing their own fiscal challenges,” said Todd Davison, Managing Director of Purbeck Insurance Services.

Regionally, SMEs in the West Midlands lead the charge on decarbonisation, while firms in the North East lag behind. Larger SMEs (100–249 employees) are more likely to implement green initiatives than microbusinesses (1–9 employees), but smaller firms aren’t standing still.

Popular environmental actions include waste reduction (45%), plastic recycling schemes, and promoting sustainable procurement across supply chains. These efforts align closely with this year’s World Environment Day theme: reducing plastic consumption.

Despite resource limitations, microbusinesses are outperforming their larger peers in keeping staff happy. 40% of SMEs with fewer than 10 employees report “very good” staff retention, compared to just 25% of firms with over 100 employees.

This strong retention is seen as a byproduct of better staff engagement and a clear commitment to doing business responsibly.

While the dual focus on people and planet is commendable, Davison warns that doing the right thing can stretch already tight budgets.

“Doing the right thing does often come at a cost,” Davison said. “It is therefore vital to ensure that if a business loan becomes necessary, a personal guarantee for that loan is taken off the shoulders of the business owner/s through personal guarantee insurance. With the right financial backing, even the smallest businesses can play a meaningful role in working towards net zero without a negative impact on their cashflow or employee well-being.”