Amanda Dorel, regional director for Wales at Lloyds Bank Commercial Banking, looks at the steps SMEs can take to reduce their environmental impact as firms report sustainability remains a focus…
The Prince of Wales’ Terra Charter, urging some of the world’s biggest business to commit to protecting the planet, has ensured sustainability remains high on the national agenda. We know that SMEs in the region are also keen to play their part in the collective effort to build towards a greener future.
South Wales has long been a hub of sustainability.
While many firms are rightly focussed on recovery from the impacts of the pandemic, sustainability remains a priority for a large number. Our recent business barometer survey found that 43 per cent of Welsh SMEs have continued with efforts to become more environmentally sustainable in the past 12 months, while 51 per cent said becoming more environmentally sustainable is important to their business in the year ahead.
There are steps that all businesses can take to reduce their environmental impact. Falling costs and the incentive of long-term savings mean sustainable technologies have become much more accessible for smaller businesses in recent years. This explains why 18 per cent made alterations to their premises to improve energy efficiency, while 13 per cent invested in energy efficient equipment or machinery during 2020.
That said, there is still a significant proportion of small and mid-market businesses that aren’t acting on their environmental impact.
For those with less room to manoeuvre, the availability of capital can be an issue. Schemes such as our Clean Growth Finance Initiative – which provides discounted funding to help businesses transition to a lower carbon, more sustainable future – can help firms access the funding they need to achieve their sustainability ambitions.
Businesses can also look at different financing options to improve their cashflow, which can give them the headroom to invest in becoming more sustainable.
Invoice finance, for example, allows businesses to access up to 90 per cent of the value of an invoice within 24 hours of it being issued. Alternatively, with asset finance, firms can spread the cost of an asset over its lifetime, avoiding the need to make a potentially sizeable outlay upfront.
While a recovery may seem some way off, the roll-out of vaccines offers hope and businesses may be starting to tentatively look to the future.
As they re-open their doors and enter the ‘new normal’, sustainability will no longer be a choice for businesses but an expectation. Indeed, 23 per cent Welsh SMEs’ cited pressure from customers as a key driver for improving their green credentials, and this will only grow as environmental awareness among consumers increases. As such, it remains important for businesses across South Wales to ensure the planet is at the heart of their recovery.