Lingering cost pressures weigh on SME sustainability investment
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Small and medium-sized businesses splashed out on costly water conservation measures amid a climate crisis and flawed infrastructure but financial burdens is weighing on future investment, new research suggests.
A report by semi-State body Uisce Éireann showed businesses sustainability investment activity among SMEs may have hit its peak after a period of outperformance, but costs continue to be an obstacle for many firms implementing sustainable practices as financial burdens continue to bite.
“Small businesses are still operating in a high inflation economy with 68% of SMEs claiming that costs remain a primary barrier to investment,” said David Broderick, director of the Small Firms Association (SFA) which forms part of business representative group Ibec.
There has been an overall slowdown in the number of businesses planning sustainability investments, falling to 15% to the end of June compared to the same period a year earlier. Similarly, the number of businesses that increased their investment in the past 12 months, at 11%, was down from 20% in 2023.
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Larger firms splurged on external expertise on sustainable practices compared to smaller firms who are still battling lingering costs, the survey indicated.
At the same time, there was a jump in interest among businesses on the availability of government sustainability grants and supports.
Mr Broderick noted that a separate survey by the SFA found business costs increased by 16% compared to the same period last year, “with one in three businesses stating a loss of liquidity within six months”.
Uisce Éireann’s SME sustainability sentiment survey gathered responses from the owners of more than 350 small and medium-sized businesses, seeking their opinion on the importance of investing in sustainability for their businesses and customers and examining the barriers that currently exist to investment in the area.
“Despite ongoing challenges related to cost, SMEs are steadfast in their commitment to maintaining and improving sustainability measures,” said Uisce Éireann’s head of customer operations Geoffrey Bourke.
Meanwhile, ahead of Uisce Éireann’s survey, Ibec has called for further funding into utilities to ensure “growth does not dry up.”
Earlier this summer Ibec head of infrastructure and environmental sustainability Aidan Sweeney said there is a “chronic reliance on unsustainably high levels of water extraction from the River Liffey” and that “the provision and capacity of water and other utility plays a critical role in residential and commercial development.”
Elsewhere, the European Commission also highlighted issues in Ireland’s water systems in recent months.
These issues included leaks from old and poorly maintained water infrastructure, with about 37% of treated water lost before it even reaches household taps.
“Not only does this result in valuable resources being wasted, but it also leads to water shortages.
“Addressing this problem requires substantial investment in maintenance, repair, and modernisation,” the European Commission said in separate research published in June.