Exploring external finance to build back better a green UK SME economy

This paper outlines key findings and policy implications from research exploring the link between external finance and SMEs becoming ?green? i.e., having a ?green mission? and adopting energy efficiency practices. The research was based on econometric analysis of data from the Longitudinal Small Business Survey (LSBS survey 2020, 2019 and 2017 waves), and builds on Cowling and Lui?s (2021) work on Access to Finance for Cleantech Innovation amongst UK SMEs. ?Green mission? refers to self-reported importance of environmental issues and goals for SMEs. Improving energy efficiency refers to taking actions in the 12 months prior to the survey (e.g., installing a smart meter, improving insulation). The focus of the analysis was on identifying characteristics that were linked with a higher likelihood of being ?green?. Our analysis highlighted the importance of government grants and financial inducements to SMEs being green. Key recommendations are for policy improvements to raise SME awareness and financing support mechanisms for the take-up of green innovations and activities.