How SMEs Can Protect Against Energy Price Shocks

Executive Summary

The fluctuations in energy prices over the past five years have created tough challenges for SMEs and in 2026 energy prices are rising yet again. Conflict in the Middle East is pushing up the cost of fuel, gas and fertiliser with electricity prices likely to follow. For the vast majority of the UK’s 5.5 million SMEs this means renewed pressure following on from the energy shock of the Ukraine war.

In this guide we look at how different sectors are impacted, and the actions they can take to protect themselves both now and in the long term. What our research shows is that some sectors are significantly more exposed than others. We analyse sectors across four dimensions: direct energy use; indirect supply chain exposure; ability to pass costs on to customers and typical operating margins and see a wide variation in how companies will be affected. The most exposed businesses combine high energy intensity with thin margins and limited pricing power.

Importantly companies have options and these are key to protecting against price increases and to building long term resilience. Drawing on the Giki Actions Library, which contains over 750 proven actions across more than 190 sectors, we have identified 120 actions specifically relevant to energy price shocks. They range from no-cost behavioural changes that can be implemented immediately to longer-term structural investments that build permanent resilience. With a blend between quick wins and long term actions companies can both act today and prepare for the future.

There is also good news. Many of the actions that save money also cut carbon. This is not a coincidence. Reducing energy consumption, switching to cleaner fuels and investing in renewables all reduce both costs and greenhouse gas emissions. At a moment when cost pressure and climate action can feel like competing priorities, the evidence is clear: they are pulling in the same direction.

This report is written for SME owners, finance directors, sustainability leads and the advisors and networks that support them including consultants and local government.

Introduction

Energy Price Shocks and SMEs

Energy prices are volatile, and rising again in 2026, driven by conflict in the Middle East. Since the end of 2025 fuel prices have risen over 20% and gas and fertiliser costs are increasing too. As these increases feed through into electricity prices the vast majority of the UK’s 5.5 million small and medium-sized businesses (SMEs) are affected in one way or another.

For businesses that have only recently absorbed the energy shock of the Ukraine war, this is unwelcome but familiar territory as the cost of running a fleet starts to rise now and gas and electricity prices follow as utility contracts come up for renewal. As a result many SMEs may be feeling that energy shocks have become the norm.

This matters because energy costs don’t just appear on utility bills, they also feed through into the cost of goods, logistics, and broadly into the prices that suppliers charge and that customers are asked to pay. Understanding where businesses are exposed, directly and indirectly, is the first step to doing something about it.

We have analysed all major sectors across the UK economy and assessed their energy vulnerability across four dimensions: direct energy costs, indirect exposure through supply chains, the ability to pass costs on to customers and typical margins. The picture varies considerably, and knowing the potential impact changes what companies should prioritise.

More importantly, using the Giki Actions library of over 750 decarbonisation actions we have identified 120 actions that businesses can take, from quick wins with minimal cost to implement, to longer-term investments that build long term resilience. Most of them have something else going for them too: they reduce carbon emissions. In a period when cost pressure and climate action can feel like competing priorities, the evidence suggests they are pulling in the same direction.

This report aims to provide SMEs, and the consultants and business networks that support them, a clear picture of energy price shock risks and a practical path through it. It will offer SMEs, many of whom want to take climate action, with ways to reduce carbon emissions too.

In Part 1 of this report we set out how energy prices impact SMEs. Part 2 looks at the sectors most exposed and Part 3 looks at the different types of actions which are possible. Part 4 provides practical examples as every SME is different and Part 5 concludes with the information and support SMEs need now.

Part 1

How Energy Prices Impact SMEs

Rising energy prices affect businesses in more ways than many realise. The gas bill and the electricity meter are the obvious places to look, but they are only the start. Costs ripple outward through supply chains, logistics and the broader economy. For many SMEs, the indirect and wider economic effects can be just as important as the direct ones. Understanding the full picture is essential to knowing where to act.

Direct Costs: Gas

Most businesses are on fixed-price contracts, negotiated and renewed at different points in time. This means the impact of rising wholesale gas prices is uneven: some businesses will face higher bills straight away, while others are protected by contracts agreed before any price rises. But as contracts come up for renewal, the new reality of the market will become unavoidable. The most immediate on-site impacts are through:

• Heating and hot water: relevant to almost every business from an office to a distribution centre or factory
• Process heat: ovens, kilns, furnaces and steam generation for manufacturing and materials
• Sector specific uses: for example, in catering gas hobs, grills and ovens

For businesses in manufacturing, food service and hospitality gas costs can represent a significant share of total operating costs. Rising wholesale gas prices feed directly into these bills eventually.

Direct Costs: Electricity

As with gas, the timing of when a business feels higher electricity prices depends largely on when their current contract was agreed and when it expires. Businesses having to renew in the short term will face very different markets to those who’ve locked in rates before. Electricity costs touch almost every part of business operations, through:

• Lighting: interior, exterior and signage
• Heating: heat pumps and panel heaters
• Air conditioning and ventilation systems
• Refrigeration and cold storage
• IT and office equipment: computers, printers, servers
• Electric vehicle charging
• Production machinery and motors

As a result electricity costs affect virtually every SME.

Direct Costs: Vehicles and Fuel

For any business that operates a fleet, whether cars, vans or trucks, fuel costs are a direct and visible line on the budget. For example, when pump prices rise sharply businesses with field sales teams, delivery operations, construction equipment or service engineers feel this immediately. It is also one of the fastest-moving costs, with prices visible at the forecourt every day.

The Wider Economic Effect

Energy price shocks do not stay contained within individual business costs. They have broader economic consequences that affect the environment in which SMEs operate.

Borrowing costs. Energy-driven inflation has historically prompted central banks to raise interest rates. Higher rates increase the cost of business debt, overdrafts and commercial mortgages. For SMEs carrying debt or planning investment, this is a real constraint on financial flexibility.

Demand destruction. When energy costs rise across the economy, consumer and business spending tends to slow. For SMEs in more cyclical sectors, including retail, hospitality, leisure and discretionary services, this can affect revenue at exactly the moment when costs are rising. The squeeze comes from both directions.

Part 2

Sectors Which Are Most Exposed

In Part 1 we looked at how energy price shocks feed through to rising costs in different ways.

In Part 2 we’ll look at different sectors, as not all SMEs face the same risk. A haulage company and a software firm both pay energy bills, but their exposure to an energy price shock is fundamentally different. To understand which sectors are most vulnerable, we assessed 24 sectors across four dimensions.

“The most exposed businesses combine high energy intensity with thin margins and limited pricing power.”

The Most Exposed

The sectors facing the greatest combined pressure are those where high energy use meets thin margins and limited pricing power.

Farming sits at the top of this group: fertiliser, fuel for machinery, crop drying and livestock feed are all energy-linked, margins are razor thin, and the ability to pass costs through to buyers is heavily constrained by retailer and processor power. Food and drink companies also face real pressure, with both its own processing and chilling costs rising and their upstream agricultural input costs climbing simultaneously.

Transport and logistics businesses are immediately exposed through fuel, which is often their single largest operating cost. Although freight surcharges provide a mechanism for cost recovery, these may lag price moves, leaving a painful gap. Manufacturing and car companies are also in the most exposed group with energy-intensive production, rising input material costs, and customers who may be feeling the squeeze themselves.

Material Impact

The next group faces serious pressure, though with slightly more room to manoeuvre.

Consumer-facing retail, whether food or general merchandise, combines high indirect exposure through supply chains with lower margins and customers who are themselves under financial pressure from rising household energy bills. The demand and cost squeeze arrives simultaneously.

Consumer services, including hospitality and leisure, face high direct energy costs in running venues alongside a softening of customer spending. And this is also not just about businesses. Community sector organisations, including charities and social care providers, are in some ways the most vulnerable of all: energy costs in premises are significant, but there is no commercial mechanism to pass costs on and financial reserves are often limited.

Moderately Exposed

Businesses in this band typically have either better margins, stronger pricing power, or lower direct energy intensity than the groups above. Real estate faces rising service charge costs and commercial tenants who may be under pressure, but reasonable margins provide some buffer.

Lower Exposure

Professional services, software, financial services and pharmaceuticals sit in the lower exposure band. Their direct energy costs are a relatively small share of total costs, margins are generally stronger, and pricing power is greater. That does not mean they are unaffected, but the threat that faces a farming business or food manufacturer is not present here.

The full list of sectors, and their exposure, is in the appendix.

Part 3

Energy Price Shock Actions

In Part 1 and Part 2 we covered how energy price shocks affects companies and who is the most exposed. For any small business though the main question is what can be done about it?

Whilst the challenge can feel overwhelming, particularly for smaller businesses without dedicated energy or sustainability teams, there is actually a great deal that any business can do, and much of it is faster and cheaper to implement than most people assume.

To draw this conclusion we analysed the Giki Actions library of over 750 actions that companies can take to reduce carbon emissions but with a focus on actions which can help protect SMEs from energy price shocks. Encouragingly we found 120 actions that are not just well spread across sectors, but which also combine quicker wins with actions that need longer term investment. Below we lay out the framework we used which provides a useful starting point for anyone prioritising different types of action, and then the actions themselves.

As well as our own research we draw on research by the International Energy Agency who have looked extensively at the energy sector and energy transition through the lens of efficiency, behaviour change and long term structural shifts.

“Many of the actions that save money also cut carbon. This is not a coincidence.”

Where to Start? The Three Tiers of Commitment

Actions differ in how much time, capital and organisational effort they require. This is key information for any SME looking to take action as many companies are put off by assuming that all actions require capital outlay or have long payback periods. Whilst that is clearly true for some actions (although the payback period with high energy prices and falling renewables costs are getting better and better) it’s far from true for all the actions available. In fact, from the 120 actions we uncovered that protect SMEs from energy price shocks they fitted into three tiers:

120 Ways to Cut Costs and Carbon

Categorising actions in this way we found that the options available to SMEs are far broader and more practical than many people realise. Across the 120 actions we have identified for this report, a large share is available to any business regardless of size, sector or technical expertise. Many require no specialist knowledge to implement and some cost nothing at all.

Chart 1 shows the split by commitment tier. As can be seen there are plenty of Quick Wins for companies to focus on immediately. From the 800+ SMEs we’ve helped to build Climate Action Plans in Giki Actions, we’ve seen this through the popularity of actions such as the Energy Treasure Hunt where companies have been able to reduce energy costs by over 5% with simple facility walk arounds that also engage employees on actions they can take.

The Four Types of Action

As well as the three tiers of commitment it can also be useful to see the direct way that actions lead to costs reductions. Actions business can take to reduce energy costs and carbon emissions can be placed in one, or more, of these four categories:

The breakdown in the actions by type is shown in Chart 2. Again, what’s encouraging is the spread of options available to any small business.

Every Sector is Different

Beyond the cross-sector toolkit, a meaningful cluster of actions is tailored to specific industries. Examples include:

• Hospitality and food service: electric kitchen equipment, behaviour change checklists
• Construction: on-site efficiency measures and on-site renewables
• Farming and agriculture: vehicle fuel efficiency and farm building insulation
• Transport operators: fleet electrification, telematics and HGV transition planning
• Retail: freezer cabinet upgrades and store-wide energy efficiency programmes
• Leisure and community centres: swimming pool decarbonisation and phased energy upgrades

The depth and specificity of these actions matters. A generic energy efficiency checklist is useful. An action written specifically for a restaurant or small construction firm with implementation steps and a clear business case is something a business owner can actually act on. Chart 3 shows the split between actions for everyone and sector specific ones. This breadth gives SMEs relevant opportunities to act.

Cutting Cost and Carbon

One of the most important things about responding to energy price shocks is that not only does it protect companies from higher costs and energy insecurity but also it helps to reduce carbon emissions. Lower energy use, reduced fuel consumption, and electrification all have a direct impact on carbon emissions.

Unsurprisingly, the majority of the actions are in Scopes 1&2, the direct operational emissions that companies can change. But as Chart 4 shows it goes wider than that both because of the need for Enablers to drive long term change and also because some actions involve stakeholders — whether that’s building more efficient products, working with logistics partners or talking to clients about how to reduce energy consumption in the use phase.

Part 4

Practical Examples for SMEs

Every SME is different and the options they need to protect themselves from energy price shocks will vary as a result. But what could this actually look like in practice? We’ve put together some illustrative examples of how different businesses could pick just a few actions to save cost and carbon combining Quick Wins, Future Proofers and Enablers.

We believe this final step, of providing companies with a specific list of relevant, practical actions is absolutely critical. Generic advice is useful context, specific actions are actionable and real.

Part 5

What SMEs Need Now

The analysis in this report points to a clear conclusion — energy price shock are now part of everyday life and likely to get worse with different impacts for different businesses. However, actions exist to protect SMEs during these times and the faster they move the better placed they’ll be on cost, on resilience and on carbon. Moreover, companies don’t have to spend money to start taking action.

“What stands between most SMEs and meaningful progress is not willingness. It is two things: information and investment.”

Information: Getting Started on Quick Wins

The fastest wins require no capital, only clarity about where to start. A growing range of organisations can help:

• National resources. The UK Government’s Business Climate Hub offers free guidance tailored to smaller businesses. The Carbon Trust provides sector-specific advice and tools. The Energy Saving Trust covers both transport and buildings. Although targeted at UK companies, they are relevant for most SMEs around the world.
• Sector bodies. Trade associations in many sectors have developed energy guidance specific to their industries. If yours has, it is worth starting there.
• Local support. In the UK many local councils run SME energy efficiency programmes, some with funded audits. It is worth checking what is available.
• Giki Actions. The framework and actions set out here are designed to give any SME a clear starting point, without needing a consultant or a sustainability team. Companies can also sign up to Giki Actions to build a free Climate Action Plan including these Energy Price Shock actions.

Investment: Making the Bigger Changes

For structural measures, access to affordable capital is the critical enabler.

Conclusion

Despite the Pressure, SMEs Have Options

Lower bills, lower carbon, greater resilience.

Energy price shocks are disruptive. But they are also, consistently, the moments when businesses can make changes and discover that those changes make them stronger. We hope this report will help SMEs find the options that are available to them to protect from energy price shocks whilst also making things better for the planet.

About

About Giki

Giki is a mission-led B-Corp and social enterprise combining deep sustainability expertise with purpose-built tools to make climate action faster, practical and accessible. Founded in 2017 by sustainability leaders with 40 years of combined experience, Giki has helped 800+ companies worldwide, from SMEs to global market leaders, with over 150,000 people taking more than one million climate actions using Giki’s platforms. The Giki Actions library contains more than 750 decarbonisation actions, developed and refined over years of analysis and real world usage in over 190 sectors.

The Authors

The analysis in this report is as at May 2026.