Small and medium-sized enterprises (SMEs) across the UK are showing remarkable resilience by prioritising employee welfare and environmental sustainability, despite mounting economic pressures, according to new research by Purbeck Insurance Services.
As inflation and the cost of living continue to strain households and businesses alike, over half (51%) of SMEs have stepped up to support their staff. The survey by Purbeck – the UK’s only provider of personal guarantee insurance – found that nearly half of these businesses have either reviewed salaries or issued cost of living bonuses to help employees navigate ongoing financial challenges.
This employee-first approach comes at a time when only a third of Britons describe themselves as financially comfortable, according to recent YouGov data. Yet, despite operating in a tough economic environment themselves, UK SMEs are doubling down on staff welfare — recognising the value of retaining loyal, motivated teams.
Todd Davison, Managing Director at Purbeck Insurance Services, said: “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. Doing the right thing does, however, often come at a cost.”
Alongside their people-first mindset, SMEs are also taking environmental responsibility seriously. Ahead of World Environment Day on 5 June, Purbeck’s research revealed that nearly two-thirds (64%) of SMEs are implementing measures to reduce their carbon footprint.
Sustainability efforts were most prevalent among businesses run by younger leaders aged 25-34, and geographically strongest in the West Midlands. In contrast, firms in the North East were the least likely to be introducing environmental policies.
Larger SMEs (with 100-249 employees) are leading the way on green initiatives, with actions ranging from reducing business waste (adopted by 45%) to launching in-house recycling schemes. Notably, one in three SMEs tackling environmental concerns is encouraging sustainable procurement practices across their supply chains, demonstrating a growing awareness of embedded sustainability at an operational level.
While green action and employee support both carry costs, Purbeck’s report suggests that good business practices are translating into strong staff loyalty. The smallest firms are seeing the best retention rates, with 40% of businesses with fewer than 10 employees describing their employee retention as ‘very good’ — a higher proportion than their larger counterparts.
Davison added: “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 wellbeing. That’s why it’s vital to protect owners from risk if a loan is required — personal guarantee insurance helps to de-risk borrowing and enables SMEs to focus on their long-term goals with confidence.”
The findings underline how UK SMEs — often referred to as the backbone of the economy — are doing more than just surviving; they’re helping drive social and environmental change from the ground up. As the push toward net zero gathers pace and workers continue to feel the pinch, this dual focus on sustainability and staff support may prove critical in shaping a more resilient, responsible economy.
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UK SMEs show resilience by supporting staff and embracing sustainability