ResponsibleBusiness
Does it have to be growth or sustainability?
As the political landscape shifts both domestically and globally, does the pursuit of galvanising the economy mean ESG goals are being left behind?
Words Annie Makoff Illustration Andrew Nye
Kick-starting economic growth to “raise living standards” and “rebuild Britain” has sat at the heart of the Labour government’s strategy since it came to power in July 2024.
In her Spring Statement in March 2025, Chancellor Rachel Reeves announced measures to stabilise the UK economy through welfare cuts and fiscal reforms, hailing a “new era” of security and national renewal.
The sustained focus on economic reform signifies a shift in the political climate, which the government says is vital in reducing the £22bn black hole in public finances and, ultimately, achieving long-term growth.
But what does this mean for net zero targets and environmentally-conscious businesses?
“Sustainability has absolutely slipped down the priority list for the government,” says Kathryn Frimond MAAT AATQB, director of Your Local Bookkeeper, a practice that supports planet-focused businesses. “There just seems to be less focus on sustainability now. In many businesses, it’s now seen as a ‘nice to have’ but it should be top of the list, first and foremost.
“Things like MTD [Making Tax Digital] and AI have completely taken over in the accountancy field and these are just masking the urgency of sustainability. We’re at the tipping point now and, if we don’t act now, we’ll start to see the impact of a real environmental crisis.”
As Frimond explains, sustainability is not just about the environment and the planet, but about social and ethical considerations, too. Yet she insists the “entire political focus” is on GDP, which does little to help small businesses.
She points to multinational companies such as BP, Shell and Barclays, which have huge investments in fossil fuels and the arms trade. It’s these companies, Frimond says, that need to be targeted. “Instead, central government is trying to push the onus onto individuals and small businesses into becoming more sustainable,” she says. “But it’s a distraction from the real big powers and the devastating damage they are doing to the environment.”
We’re going to see ripple effects, and big businesses are more likely to roll back on plans, particularly those who are US-focused.
Tough environment
At the same time, there appears to be little incentive now for businesses to go down the sustainability route. Aaron Westgate, AAT tutor and sustainability lead, points to the £15,000 green initiatives grant given to businesses in Cambridge last year that really helped to push the sustainability agenda across the region. Since then, there has been very little – at both regional and national level.
“These initiatives made a huge difference,” he says. “But with the smallest businesses worrying about cash flow and how they are going to pay the next invoice, if it’s a choice between paying a supplier on time or investing in an environmental initiative, they are going to pay the invoice every time. Sustainability just won’t be a priority.”
Frimond agrees. “There aren’t many grants available so there’s no incentive,” she says. “I had a call with a client recently who can no longer afford to go down the sustainability route, where previously it was something they had been wanting to do. It’s a hard environment for business owners already – balancing the cost of living, tax changes and just trying to navigate their way around it all.”
Andrew Nye
Cause for optimism
Dan Firmager, chartered accountant and ESG adviser at Kreston Reeves, takes a more optimistic view. “Environmental sustainability isn’t on the back burner and it’s definitely still a priority for many businesses,” he insists, pointing to increased pressure from stakeholders and investors to ensure businesses are working to reduce their carbon emissions and act more sustainably.
Indeed, a global survey by Capgemini Research Institute revealed that more than 60% of businesses expect to increase their sustainability budgets and prioritise sustainability plans during 2025, despite economic challenges. Meanwhile, global interest in sustainable investing was found to remain unchanged since 2023, according to Morgan Stanley.
“Leaning into sustainability will actually create more economic growth,” says Firmager. He cites a Confederation of British Industry (CBI) report, which revealed that the net zero economy grew by 10% over the last year and now contributes £83.1bn in gross value added (GVA). Analysis revealed that it’s a “significant driver” of growth, innovation and productivity, making it vital for the government’s wider growth agenda.
“The net zero economy is responsible for employing 950,000-plus people now. The statistics are absolutely clear: economic growth and sustainability go hand in hand,” adds Firmager.
Stalls and delays
Yi Zheng, senior manager for sustainability and ESG at Saffery, says businesses are keeping their powder dry as they wait for the regulatory environment to settle down.
“I don’t think we’re seeing companies retreating from a strategic point of view because they recognise the value that has been created by ESG and sustainability, so the whole strategic piece is still there,” she says.
“But I think there is more action is on the reporting side. When the EU is trying to deregulate the Corporate Sustainability Reporting Directive, trying to water it down and simplify the whole reporting expectations, delaying it by a few years – that all has an effect. Due to the regulatory emphasis on the reporting aspect, there are actions that are being taken. “Companies are pausing, not stopping on this; they are waiting to see what’s becoming clear on the regulatory front and then they can act appropriately, rather than doing things that may create an extra burden to the business. That is a waiting game, rather than retreating completely.
“But I also see firms rebranding their initiatives, using different names to address essentially the same thing, because language is very important to a lot of this. I have heard businesses from the US that are doing the diversity and inclusion piece but they cannot refer to women or DEI using that specific terminology, although they are doing the same kind of activities. They are rebranded under ‘engagement’, ‘culture creation’ and all those things. Basically, it’s the essence of DEI but not DEI per se.”
Additional reporting by Christian Doherty
Political realities
Even so, there is concern that political shifts at both national and international level could end up influencing business priorities. The rollback of both diversity, equity and inclusion (DEI) and climate change initiatives in the United States following executive orders from President Donald Trump have already seen the likes of Amazon, Google and Meta scaling back on their diversity and environmental commitments – and more companies are likely to follow.
“When a big superpower is rolling back on DEI initiatives and green plans, it gives permission for others to do it, too,” says Frimond.
But Westgate isn’t so sure. “We’re going to see ripple effects and big businesses are more likely to roll back on plans, particularly those who are US-focused, but businesses whose models have been wholly built around the environment and who have a moral compass aren’t going to change what they are doing,” he insists. UK businesses, he says, will hopefully see this as a “bump in the road” rather than a “redirection”, although it’s likely to delay progress.
He points to the government’s Great British Energy legislation, which will see a new publicly-owned energy company invest in clean power projects across the UK as part of a wider strategy to become a clean energy superpower.
Yet, at the same time, the government is backing a third runway at Heathrow and a second at Gatwick to boost economic growth with watered-down sustainable aviation targets of just 22% by 2040 that Westgate describes as “disappointing”.
Accountants, then, have a huge role to play in ensuring businesses continue to meet sustainability goals and operate as environmentally consciously as possible.
As an ESG adviser, Firmager supports clients in measuring carbon emissions and integrating key findings into recommendations.
“You can produce a carbon emissions report and focus on that, but the real benefit is taking a holistic approach,” he explains. “It’s about embedding sustainability initiatives into the business as a whole and engaging with key stakeholders to develop a plan that resonates with corporate and environmental needs.”
Frimond, whose practice is on a mission to ‘green up’ the accountancy sector, offers carbon literacy training to accountancy businesses, in collaboration with Sustainability Suite. The course, lasting two half-days, provides an overview into the most carbon-intensive industries and teaches businesses how they can calculate and measure their own carbon footprint, as well as the steps they can take as accountants.
“We have a huge opportunity and obligation to save the world,” says Frimond. “Bookkeepers in particular have daily contact with clients, so we’re at the forefront of the battle to save our planet.”
