Manufacturing SMEs are operating in an environment defined by rising costs, supply chain uncertainty and geopolitical instability. Yet despite these pressures, sustainability is becoming more embedded in how these businesses operate.
Compared with 2019, when net zero targets were first introduced, 36% of manufacturing SMEs say they now undertake more sustainability-related activity in their day-to-day operations - the highest across any sector. A further 22% say sustainability is now more strategically embedded in their business culture, supported by clearer planning and internal processes.
This highlights a central tension for manufacturing SMEs: while sustainability is increasing in importance, businesses are balancing it against mounting operational and financial pressures.
Sustainability is rising - but under pressure
It is against this broader backdrop that sustainability is being shaped within manufacturing SMEs.
It is perhaps then, unsurprising that findings from our Spring 2026 sustainability research show that 78% of small businesses in the manufacturing sector say that operational, economic and market conditions are a key challenge when considering their sustainability goals. This underlines how closely sustainability is now linked to the commercial realities of running a business in the sector, rather than sitting as a separate or longer-term agenda.
However, in more positive news, when asked how their view of sustainability has changed over time, 96% of manufacturing SMEs say sustainability is now more important to their business than it was a year ago, highlighting a near-universal shift in how the issue is being viewed across the sector.
Within this context, sustainability is increasingly being viewed through a pragmatic lens - not as an additional responsibility, but as part of how businesses manage efficiency, resilience and cost control in an unstable environment. Rather than sitting outside core operations, 36% of businesses in the sector say that it is core to business culture and planning, while a further 32% say that they can see the business benefits of being more sustainable and are doing small practical things to improve sustainability.
A practical and commercial driver of change
Rather than being seen as a cost burden, sustainability is increasingly linked to commercial opportunity and competitiveness.
Nationally, 23% of manufacturing SMEs say they would win more business by being more sustainable, while 18% believe they risk losing customers if they fail to meet expectations. This reinforces the growing link between sustainability performance and market position.
However, the ability to act depends heavily on practicality. When asked what would help turn sustainability intentions into action, 32% of SMEs say understanding tangible cost-saving benefits would make the biggest difference - the highest across all sectors. A further 26% say they need simple, practical guidance from government, local authorities or industry bodies, while 23% would value learning from other small businesses.
There is also a forward-looking commercial dimension. 19% say they would be more likely to act if sustainability helped them diversify into new markets, showing how closely environmental decisions are tied to growth strategy.
Cost pressures are shaping what's possible
Despite this momentum, manufacturers continue to face significant challenges that shape what is possible in practice.
Looking ahead to 2026, 78% of SMEs cite operational and market pressures as a key challenge, while 42% highlight broader economic and political uncertainty. Financial concerns remain particularly strong, with 45% pointing to rising inflation and interest rates, 39% to rising energy costs, and 28% to both government policy impacts and fuel cost pressures. A further 28% cite supply chain risks alongside growing pressure to improve green credentials.
These challenges underline a central tension: sustainability is becoming more important, but it must be delivered within a highly constrained operating environment.
Sustainability as part of everyday business decisions
Despite these pressures, the data shows that sustainability is becoming more embedded in how manufacturing SMEs operate on a day-to-day basis. 32% of manufacturing SMEs are focusing on improving policies and facilities around packaging, waste and recycling, while an equal 32% are prioritising creating a positive impact in their immediate community. These actions reflect a focus on efficiency and local responsibility rather than large-scale transformation.
Energy use is another key priority. 23% of manufacturing SMEs are reviewing energy consumption across their premises - including water, heating and renewable energy - a figure significantly above the national average of 14%. Alongside this, 20% are investing in more sustainable equipment and infrastructure, while 17% are switching to greener forms of transport. Taken together, these actions suggest that sustainability is being delivered through incremental improvements embedded within existing business processes.
Sustainability shaped by customers and business relationships
One of the most notable findings is where influence is coming from. Sustainability in manufacturing SMEs is increasingly being shaped by customers and close business relationships rather than top-down regulation.
A third of manufacturing SMEs (33%) say their customers are the biggest influence on their sustainability approach - the highest across all sectors. This highlights how strongly customer expectations are now shaping business behaviour.
Alongside this, 30% cite business partners and 29% say staff and colleagues are key influences. This shows that sustainability is being shaped within everyday commercial relationships, rather than being driven externally in isolation. Personal influence also plays a role, with 18% citing partners and 17% referencing their children as influencing their approach to sustainability.
What emerges from the research is not a sector treating sustainability as a separate initiative, but one steadily embedding it into how business decisions are made.
For UK manufacturing SMEs, sustainability is increasingly defined by efficiency, cost control and customer expectations rather than environmental ambition alone. It is being shaped by operational pressure, reinforced through commercial relationships, and delivered through incremental change rather than large-scale transformation.
Importantly, this does not represent a slowdown in ambition. Instead, it reflects a more practical and grounded approach - where sustainability is becoming part of how manufacturing SMEs operate, compete and grow.
Supporting SMEs to turn intent into action
Through this research - and our ongoing podcast conversations with small business owners across the UK - sustainability is not about perfection. For many SMEs, it is about practical steps, steady progress and finding workable solutions in a complex environment.
At Novuna Business Finance, our focus is on listening to these needs and helping businesses turn intent into action. While many SMEs want to do more on sustainability, challenges such as access to finance, clarity on requirements and uncertainty around where to start can slow progress.
We help break this down into achievable steps, support investment in efficiency and sustainability-led improvements, and give businesses the confidence to act in a way that works commercially as well as environmentally.
Novuna Business Finance provides business finance to SMEs and larger corporations across the UK, including asset finance, stocking, block discounting and sustainable project finance delivered through brokers, vendors, manufacturers and directly to businesses.
With an asset portfolio of more than £1.9bn, the business operates across sectors including transport, agriculture, construction and manufacturing and was awarded Best Leasing and Asset Finance Provider at the 2025 Business Moneyfacts Awards.
Its Sustainable Project Finance team is also supporting the development of energy and transport infrastructure projects that are critical to the decarbonisation of the UK economy.
To discover more visit: https://www.novuna.co.uk/business-finance/ [1]