Findings by UK Bank NatWest, suggest that UK SMEs still reeling from the negative impacts of the pandemic, are prioritising economic recovery at the expense of green policies.
Natwest study reveals pandemic impacting SME green agendas
Recent findings from Natwest show the negative impact coronavirus has had on SME’s progress towards sustainability. Plans to advance environmentally friendly practices have been hampered by a need to focus instead on recovery from the pandemic. For many companies this is likely more about survival, rather than a focus on improving profitability.
Using data from IHS Markit’s Purchasing Managers Index survey, which was conducted in December 2021, the views of 850 decision-makers at UK businesses were taken into consideration. Sectors which were represented included manufacturing, retail, construction, and hospitality and leisure.
The survey showed that UK SMEs have reduced their focus on sustainability action in comparison to the levels seen prior to the pandemic. This is in despite of green policies being found to boost recovery and growth; such as from lower prices and enhanced efficiencies. Contrastingly, the bank found that large companies reported a considerable increase in their prioritisation of sustainability action for 2022, further extending the gap between themselves and smaller businesses, in terms of progress towards sustainable practices.
Andrew Harrison, Head of Business Banking for NatWest Group, said:
“It’s been a challenging 18 months for UK SMEs, and not surprising therefore that the climate agenda has slipped back on the agenda for some small businesses. But it’s important that SMEs know that sustainability measures can boost their recovery, and even fuel their growth, for example through increasing efficiency, lowering energy bills and by future proofing their operations.”[i]
In terms of the statistics, 41% of SMEs stated that sustainability action was a high priority in the next 12 months, down by 3 percentage points from the 44% reported in February 2020. This compared with 60% of large companies (up 3 percentage points from 57% prior to the pandemic). When asked what had the biggest influence on SMEs’ efforts to improve environmental sustainability, the survey found that customer expectations was the highest ranked influence. This is positive given recent findings in Deloitte’s 2021 Sustainability and Consumer Behaviour research[ii], which found that sustainability remained a key consideration for consumers in 2021, even with the global pandemic. The study reported that 32% of consumers said they were highly engaged with adopting a more sustainable lifestyle. Further, almost 1 in 3 consumers stated that they had stopped purchasing certain brands or products because they had ethical or sustainability concerns about them.
However, in a more concerning sign the NatWest study showed there was a clear divide in the motivation to pursue sustainability plans. When comparing large companies and SMEs; it remained much higher at large firms (51% versus 35% for SMEs).
This blog reflects the authors own opinions, it therefor does not reflect the thoughts or opinions of the business, or any affiliated organisations. The information presented in this blog is purely for interest, it should not be seen as direct business advice or investment strategy - using it for such purposes remains at your own risk. Our analysts work hard to gather these insights, as such please do quote and link back to their research, or ask permission, before using excerpts.