How can businesses build sustainability momentum in 2026?

How UK businesses can maintain progress on net zero in 2026

The commercial case for sustainability feels harder to make in 2026 than it did two years ago. Consequently, many UK businesses face growing pressure to deliver short-term financial results. Meanwhile, long-term climate commitments risk being pushed down the priority list.

However, recent analysis suggests businesses can maintain momentum by connecting environmental action directly to financial performance. A roundtable hosted by edie in partnership with Ecologi examined how organizations can strengthen their sustainability position through practical steps that demonstrate immediate business value.

This approach matters because the alternative is drift. Businesses that pause their sustainability work now may find themselves locked out of tenders, supply chains, and markets in 18 months. Those that continue carefully will build competitive advantages as regulations tighten and customer expectations evolve.

CFO scrutiny and the pressure on sustainability budgets

Sustainability teams now operate under closer financial oversight. CFO involvement in ESG funding decisions rose from 59% in 2023 to 77% in 2025. More than 60% of sustainability leaders report that their work must now demonstrate clear business value to secure continued investment.

This shift reflects broader economic uncertainty. Geopolitical fragmentation, regulatory changes across different jurisdictions, and concerns about profitability have combined to increase scrutiny on all discretionary spending. Sustainability budgets are not exempt.

For UK SMEs, this creates a specific challenge. Unlike larger corporations, smaller businesses often lack dedicated sustainability staff or separate budgets. Therefore, any environmental initiative must justify itself on commercial grounds from the outset. The days of treating sustainability as purely a corporate responsibility exercise have passed.

Nevertheless, this heightened scrutiny also creates opportunities. Businesses that can quantify the financial returns from sustainability work will find it easier to maintain funding and senior leadership support.

Regulatory developments affecting UK businesses from 2026

Several regulatory mechanisms take effect or intensify from January 2026. The EU Carbon Border Adjustment Mechanism (CBAM) now imposes costs on carbon-intensive imports including steel, cement, aluminum, fertilizers, and electricity. UK businesses that export to the EU or source materials from outside Europe face new compliance requirements and potential cost increases.

Additionally, Scope 3 emissions reporting standards have tightened. The Science Based Targets initiative version 2 requires more granular data from supply chains rather than estimated averages. This means businesses must track actual emissions from purchased goods, logistics, and business travel with greater precision.

In parallel, several US states have introduced extended producer responsibility rules covering textiles, packaging, and electronics. UK businesses selling into these markets need to understand their obligations. Similarly, sustainable bond issuance is projected to exceed $1 trillion in 2026, driven by energy transition financing needs.

European procurement policies increasingly embed climate requirements into tender criteria. Public sector contracts often require bidders to demonstrate carbon measurement, reduction plans, or specific environmental certifications. The UK government’s Procurement Policy Note 06/21 established this pattern in 2021, and it continues to influence both public and private sector procurement decisions.

Twenty practical actions businesses can take this year

Ecologi has identified 20 high-impact actions that businesses can prioritize. These fall into five categories: risk reduction, cost savings, employee engagement, supply chain management, and customer appeal.

For risk reduction, businesses should commit to net zero with roadmaps aligned to ISO 14068 standards. This protects against future regulatory changes and market shifts. Clear targets also help when responding to tender questions or customer due diligence requests.

Financial savings can come from switching to renewable energy suppliers such as Ecotricity or Octopus Energy. These contracts often provide price stability compared to fossil fuel alternatives. Furthermore, reducing business travel through hybrid meetings cuts both costs and emissions.

Employee engagement improves when leadership receives carbon literacy training. Hosting sustainability lunch-and-learn sessions builds understanding across the organization. Rewarding green commuting through schemes like Cycle to Work creates cultural momentum while reducing parking costs.

Supply chain improvements require partnering with verified sustainable suppliers. Businesses should also communicate their progress publicly, particularly on platforms like LinkedIn where customers and partners can see the work being done.

Customer attraction grows when businesses adopt green web hosting providers such as Krystal and measure their carbon footprint professionally. These steps build trust with environmentally conscious buyers who increasingly factor sustainability into purchasing decisions.

Data quality and the foundation for better decisions

Accurate measurement underpins everything else. The phrase often repeated at sustainability conferences is true: if you cannot measure it, you cannot manage it. More importantly, you cannot prove its business value to a skeptical CFO.

Businesses should consolidate their environmental data and refine their double materiality assessments. This process identifies which sustainability issues affect both business performance and stakeholder concerns. Once identified, these areas warrant investment because they influence both risk and opportunity.

Benchmarking against sector peers helps identify where cost savings exist. For example, a manufacturing business that discovers its energy use per unit of production exceeds industry averages has found a clear opportunity. Reducing that gap improves both environmental performance and operating margins.

Cross-functional teams that include Finance, IT, and Operations alongside Sustainability produce better results. Finance teams understand how to quantify returns. IT teams can build the data infrastructure needed for ongoing measurement. Operations teams know where practical changes can be implemented without disrupting production.

This collaborative approach also helps when quantifying return on investment. Tying sustainability initiatives to operational efficiency, supply chain resilience, and revenue growth makes the business case much stronger than focusing solely on carbon reduction.

Key priorities for UK SMEs in the current environment

• CFO involvement in ESG funding has increased significantly, requiring sustainability initiatives to demonstrate clear financial returns alongside environmental benefits.
• The EU Carbon Border Adjustment Mechanism adds costs to carbon-intensive imports from January 2026, affecting UK businesses in manufacturing and construction sectors.
• Scope 3 emissions reporting now requires granular supply chain data rather than estimated averages under Science Based Targets initiative version 2 standards.
• Switching to renewable energy suppliers offers price stability and can reduce operating costs while meeting environmental commitments.
• Public sector procurement increasingly requires carbon measurement and reduction plans as standard tender criteria, following Procurement Policy Note 06/21 guidance.
• Employee engagement in sustainability builds organizational capacity and helps identify cost-saving opportunities that might otherwise be missed.
• Professional carbon footprint measurement provides the foundation for credible reporting and helps identify the highest-impact areas for investment.

Managing competing priorities without losing momentum

Balancing profit, environmental goals, and social responsibilities requires strategic choices. Not every sustainability initiative delivers the same return in the same timeframe. Businesses need to prioritize.

One approach involves sprinting on high-return areas while setting incremental targets for longer-term work. For instance, switching to renewable energy delivers immediate carbon reductions and potential cost savings. This justifies fast implementation. Meanwhile, redesigning products for circularity may take years but can proceed with gradual milestones that keep the work alive without overwhelming resources.

This selective approach maintains leadership buy-in because it respects financial constraints while preserving strategic direction. Sitting on the fence delivers neither financial performance nor environmental progress. Making clear choices about where to move fast and where to move steadily produces better outcomes than trying to do everything at once or nothing at all.

Circular economy models show particular promise for B2B sectors. Research indicates that 90% of chemical sector businesses report high impact from circular initiatives. UK manufacturers can learn from companies like Evonik, which targets €1 billion in circular sales by 2030, or Dow, which has integrated 65,000 metric tons of circular feedstock into production.

Artificial intelligence tools now help with supply chain due diligence, weather-related risk forecasting, and ESG data analysis. These technologies make it easier for smaller businesses to perform tasks that previously required large sustainability teams.

What our work with UK businesses reveals

We support businesses navigating these exact tensions. The organizations that maintain progress in 2026 share common characteristics. They measure carefully, connect sustainability work to commercial priorities, and communicate honestly about both achievements and challenges.

Importantly, they recognize that sustainability momentum depends on internal governance. Training staff, building data systems, and creating cross-functional teams takes time. Businesses that started this work in 2023 or 2024 now have the foundations to weather increased scrutiny. Those starting in 2026 need to build these capabilities quickly.

The commercial advantages become clearer over time. Businesses with credible carbon measurement and reduction plans qualify for tenders they would otherwise lose. They attract employees who care about working for responsible organizations. They build resilience against energy price volatility and supply chain disruptions.

Furthermore, customer expectations continue to evolve. Business buyers increasingly ask suppliers about environmental performance. Consumer-facing businesses report that younger customers particularly value sustainability credentials when choosing between similar products or services.

Our net zero program helps businesses develop carbon reporting systems that meet compliance requirements while identifying cost-saving opportunities. We find that businesses benefit most when they treat carbon measurement not as a compliance burden but as a diagnostic tool that reveals inefficiencies.

The SBS Academy offers training on Scope 3 emissions and supply chain assessment for teams that need to build internal capability. This matters because sustainability cannot remain the responsibility of one person. Embedding knowledge across the organization makes progress more sustainable.

Additionally, our procurement support helps businesses meet public sector tender requirements that increasingly include environmental criteria. Understanding what evaluators look for and having evidence ready makes the difference between winning and losing contracts.

Wider trends shaping business sustainability in 2026

Private sector investment in clean technology continues to grow. Markets reward commercially viable technologies like renewable energy more than policy-dependent approaches such as carbon capture. This suggests that businesses should focus on proven technologies with clear financial returns rather than waiting for emerging solutions.

Sustainable aviation fuel capacity increases by approximately one-third in 2026, led by Asian producers. This creates opportunities for businesses that can incorporate lower-carbon logistics into their operations. Similarly, China expands green hydrogen exports, potentially offering new options for energy-intensive industries.

Carbon pricing now covers 28% of global emissions, up from much lower levels five years ago. This trend makes carbon-intensive activities more expensive over time. Businesses that reduce emissions now will benefit as pricing mechanisms expand and rates increase.

Climate finance flows need to reach $1.3 trillion annually to meet global targets. Blended finance structures that combine public and private investment will become more common. UK businesses with strong environmental credentials may find it easier to access these funding sources as they develop.

Policy fragmentation across jurisdictions creates complexity but also opportunity. Businesses that understand multiple regulatory frameworks can operate more effectively across borders. Conversely, those that ignore developments outside their immediate market may find themselves disadvantaged when they eventually need to expand.

Sources and further guidance for UK businesses

The Department for Energy Security and Net Zero publishes guidance on UK climate policy and support schemes for businesses. Their resources include information about energy efficiency grants and renewable energy programs.

For businesses exporting to the EU, the European Commission’s Carbon Border Adjustment Mechanism guidance explains reporting requirements and cost implications in detail. Understanding CBAM helps businesses plan for increased compliance costs.

The Science Based Targets initiative provides the framework many large businesses and public sector organizations expect from their suppliers. Familiarizing yourself with SBTi criteria helps when responding to tender questions.

Additionally, the Carbon Trust offers practical resources on carbon measurement and reduction strategies. Their sector-specific guidance helps businesses identify where to focus effort for maximum impact.

Finally, Procurement Policy Note 06/21 remains essential reading for any business tendering for public sector contracts. Understanding what evaluators expect helps you prepare compelling responses to environmental questions.