This one employee benefit can improve your ESG as an SME

ESG (environmental, social and governance) is back in the spotlight, if it ever really left. Recent discussion around the UK’s future sustainability reporting framework has once again brought ESG responsibilities into sharper focus. While much of the formal reporting conversation is centred on larger and listed businesses, SMEs shouldn't assume this is a distant issue.

Larger clients are asking more questions of their suppliers. Employees are paying closer attention to the values of the businesses they work for. Lenders, investors and professional advisers are increasingly interested in how businesses manage long-term risk. For SMEs, ESG is becoming less of a theoretical concept and more of a practical business consideration.

A practical approach

As with most things in an SME, the challenge is resource. Most SMEs don't have a dedicated sustainability team. They don't have endless management time to build complex reporting frameworks or launch major transformation projects. They're focused on serving clients and running the business well.

That doesn't mean ESG should be ignored. It just means we need to take a pragmatic approach.

Rather than asking, “How do we build an ESG strategy from scratch?”, a better question may be:

“What are we already doing, or could easily introduce, that supports our environmental, social and governance goals?”

An overlooked opportunity

One answer is surprisingly overlooked: employee benefits.

A well-chosen employee benefit can do more than improve your attraction and retention numbers. It can support your sustainability strategy, as well as support how you present your business to employees, clients and stakeholders.

Cycle to Work was the pioneer. Electric vehicle (EV) salary sacrifice is the new player at the table, and it's growing fast.

What is an EV salary sacrifice scheme?

At its simplest, an EV salary sacrifice scheme allows employees to access an electric vehicle through their employer, with payments taken from gross salary. Because electric vehicles currently receive favourable Benefit-in-Kind treatment, this can make electric driving more accessible than funding a vehicle privately.

From an ESG perspective, its value is broader than the vehicle itself.

Environmentally, it gives employees a practical route into lower-emission driving. Many SMEs may not operate a traditional company car fleet, but their people still travel, commute and make personal vehicle choices. Supporting the transition to electric vehicles gives the business a clear and tangible sustainability initiative.

Socially, it strengthens the employee proposition. In a competitive labour market, people want benefits that feel relevant as well as genuinely useful. EV salary sacrifice can support financial wellbeing by offering your employees the chance to make tax savings on a new vehicle, and help SMEs offer a modern benefit that might otherwise be associated with larger employers.

There can be a benefit for the employer too, with potential Employer National Insurance savings where salary sacrifice is implemented correctly.

From a governance perspective, the right scheme brings structure. It requires clear communication, proper documentation, payroll alignment and ongoing oversight. If you define and manage it well, it’s more than a loose perk.

Building a stronger ESG strategy through employee benefits

For SMEs, the best ESG initiatives are often the ones that combine purpose with commercial sense. They shouldn't drain time from the business or exist only to satisfy a policy document. They should be practical, measurable and above all else, meaningful.

EV salary sacrifice will not be the whole answer to ESG. No single initiative is. However, it's a useful example of how SMEs can take positive action without overcomplicating the challenge.

It supports lower-emission travel. It improves the employee benefits package. It helps businesses demonstrate progress. And, when implemented properly, it gives leadership teams confidence that the scheme is being managed responsibly.

For SMEs looking at ESG and wondering where to begin, the answer may not be a major reporting project. It may be a practical benefit that employees can actually use.

Interested but don’t know where to start?

P+B’s EV salary sacrifice scheme service helps you offer a brilliant employee benefit that attracts great people who stay and enhances your ESG credentials.

While your employees enjoy substantial savings, you’ll benefit from a highly personalised journey with proactive communication and employer reporting that keeps you in control.

Want to find out more?

Speak to the team at hello@pikeandbambridge.co.uk or visit us at www.pikeandbambridge.co.uk, and we’d be happy to help.

 

This blog is one of a series of articles from our commercial partners, Pike + Bambridge. The views expressed are those of the author and not necessarily those of ICAS.