The crisis of nature loss and climate change requires businesses to take action. Small and Medium-sized Enterprises (SMEs) that support biodiversity recovery, and associated carbon capture in woodland and soil, play a key role but there is a lack of understanding of the capabilities required by these regenerative businesses to transition to sustainability. Drawing on the case of UK SMEs aiming to be nature-positive, this study sets out a framework for identifying the capabilities of SMEs for sensing, seizing and transforming organisations to address these opportunities. Drawing on rich qualitative interviews with over 100 SMEs, the paper identifies the types of SME involved, the capabilities of SMEs and the support they are using to build up these capabilities. The analysis identifies three specific dynamic capabilities focused on biodiversity: capabilities for combining biodiversity and commercial objectives in payments for ecosystem services, capabilities for reconfiguring and collaborating to deliver biodiversity and overcome the liability of smallness, and the capabilities for attracting and sustaining investment by reporting on biodiversity and developing transparency. The policy and practical implications of this research are drawn out to illuminate ways that SME involvement in nature recovery can be scaled up.
