Although 78% of SMEs could recognise legislation when prompted, few could state what it meant for them. While 54% had heard of the waste management "duty of care", for example, only 17% could name three of its requirements.
The survey of 1,175 SMEs across 12 business sectors makes worrying reading for its backers, which include the Environment Agency and its counterparts in Scotland and Northern Ireland. The results are symptomatic of a "head in the sand" attitude, the report says. It notes that SMEs are responsible for 80% of pollution incidents and 60% of commercial waste.
The survey, conducted by Atkins consultants, reveals that 86% of SMEs do not consider their activities to be environmentally damaging. This appears to be a significant increase on findings reported in earlier surveys. In 2000, Envirowise found that 48% of firms believed they had no impact on the environment; in 1995 the figure was 22%.
When prompted, more than half acknowledged involvement in activities that were potentially harmful to the environment - such as storing chemicals, fuel or waste or using energy intensively.
Only half of SMEs undertake any form of environmental action, the most popular being recycling and the appointment of a member of staff to be responsible for environmental issues. Some 17% said they had an environmental management system (EMS), a figure unchanged from a 1998 survey.
Environmental awareness and action varies according to the size and type of business. For instance, 40% of chemical firms said that they had an EMS compared with only 16% of electronics and 8% of printing and publishing firms. Similar results were found for environmental policy more generally, with chemical and agricultural firms topping the list.
Size of firm is also important, with 77% of those employing 50-250 people taking environmental measures compared with only 28% of those employing fewer than ten.
Fewer than half of SMEs regard good environmental practice as having a role to play in winning contracts. The primary motivation for taking environmental action is reduced risk of prosecution, something mentioned by 83% of respondents.
The Agency's NetRegs web site is an attempt to change SMEs' "poor awareness" of environmental obligations. It features general and sector-specific guidelines on how to comply with legislation.