New research finds that the increased cost of doing business is preventing the UK’s 5.5 million small- and medium-sized enterprises (SMEs) from going green.

Analysis from small business lender, Iwoca, found that 42 per cent of SMEs say that the rising cost of doing business means going green has become less important, and 54 per cent believe that while green issues are important, this cannot be at the expense of running their business.

Furthermore, businesses around the country are struggling to prioritise measures to reduce their carbon footprint, as core inflation rates reach 6.8 per cent – the highest in 31 years.

Read more: Direct lending is best way to go green

“This research couldn’t be clearer – SMEs want to go green, and understand how important it is, but the current economic environment is a hugely inhibiting factor,” said Alex Sheard, product manager at Iwoca.

Oxford Economics research also found that SMEs contributed 44 per cent of the UKs non-household carbon emissions, with an estimated 160 million tonnes of greenhouse gas emitted.

Read more: The 15 P2P and crowdfunding platforms with B Corp status

The top three reasons SMEs aren’t going green all relate to cost, with 32 per cent blaming the unaffordable costs associated with being an environmentally-friendly business; 26 per cent feel the lack of government support and grants is the biggest barrier; 19 per cent believe it’s because of a lack of tax incentives; 14 per cent said there is a lack of information or resources on how to green my business; and 13 per cent believe they will make less money if they make the business more environmentally-friendly.

“For the UK to meet its net zero targets, we must not forget about our SMEs, who account for 99.9 per cent of the business population, and generate over 40 per cent of the UKs non-household carbon emissions,” Sheard said.

Read more: Climate change: How investors can take action

“From how they invest, how they heat and insulate office and factory spaces, to how their employees travel – going green seems to be a significant operational challenge for SMEs, and access to capital is a crucial component in turning this around.”