THE vast majority of small companies in Scotland are in denial about the environment, with more than 90-per cent believing that nothing they do could ever create waste or cause pollution - despite many admitting to potentially damaging practices.

A survey for the Scottish Environment Protection Agency (Sepa) of 1300 small businesses found that only 7-per cent thought their activities could damage the environment.

But when the companies were reminded of potentially harmful practices, such as storing waste, burning energy or using chemicals, nearly half admitted participating.

Dr Richard Dixon, director of environmental group WWF Scotland, said: "It is shocking to find such a basic ignorance from businesses about their own impact on the environment."

The survey, carried out for Sepa's small business website netregs. co. uk, also found only 14-per cent of businesses could name any environmental legislation, and just 13-per cent were involved in a business forum that discussed environmental issues.

The survey concluded that "many smaller business have a poor understanding of the effects of their activities on the environment and are failing to take practical measures to reduce their impact".

But Sepa took some comfort from the fact that Scottish businesses weren't as bad as those in England and Wales.

More than a third of Scottish businesses claimed to have an environmental policy, 10-per cent more than the UK average.

And some 42-per cent of Scottish businesses said they had taken practical measures to reduce environmental damage, against 31-per cent throughout the UK. The most common action was waste recycling, followed by energy efficiency and reduction of water use.

Sepa's chief executive, Campbell Gemmell, said that netregs. co. uk had been set up to help small businesses become more environmentally aware.

"It's important for small businesses to take steps to lessen their environmental impact, not least to avoid unnecessary expense and fines. But what most don't realise is that 'going green' can also improve their profit margins through measures such as using resources more efficiently, " he said.

The Confederation of British Industry (CBI) in Scotland said the business community was willing to accept its environmental responsibilities, but there were problems.

Alan Mitchell, assistant director of CBI Scotland, said:

"This shows that it's a hugely complex issue and companies need a lot of guidance and advice."