Savanta has used the 2022 April Business Tracker amongst 1009 UK businesses to better understand business sentiment on this very important issue.
The April Savanta Business tracker shows that some 8 in 10 businesses (81%) consider becoming a more sustainable business a priority.
A challenging goal
The COP26 summit back in autumn of 2021 introduced legal requirements re climate change and with governments getting more serious about addressing issues, businesses are facing pressure from customers, shareholders and regulators to move the agenda forward.
With the Covid-19 pandemic at full force, businesses needed to focus on survival, now with the danger largely abated, attention is moving back to sustainability and Environmental, Social and Governance (ESG) issues.
There are now over 700 B Corps in the UK but much more will need to be done if the UK economy is to meet its sustainability targets by COP27. And with sustainability being only part of the ESG goal, businesses have much to do.
Sustainability concerns high, action low
The April Savanta Business tracker shows that some 8 in 10 businesses (81%) consider becoming a more sustainable business a priority, with almost 1 in 2 (46%) considering it the ‘most important priority’ (11%) or a ‘significant priority’ (35%) for their business.
Whilst only 1 in 4 (27%) actually have a policy in place, a further 1 in 2 plan to introduce one either this year (21%) or in the future (25%) but very disappointingly, 1 in 5 (22%) have no plans to do so at all.
Smaller businesses with under £1m turnover are significantly less likely to consider sustainability as a strategic priority (74%) or to have a policy in place (27%) compared to businesses with turnover of £1m+ (90% consider it a strategic priority and 38% already have a policy in place).
Very worryingly, almost 1 in 4 (23%) small businesses do not consider sustainability to be a strategic priority and 3 in 10 (31%) have no plans to develop a policy on this.
Given that smaller businesses form the majority of the total UK business market, this lack of commitment and planning is of major concern.
Some hope on the horizon
When asked how likely businesses were to borrow specifically to invest in ESG projects, some 4 in 10 (40%) expected to do so in the next twelve months. Larger businesses with £1m+ turnover were more than twice as likely to expect to do so than their smaller business counterparts (61% vs 24% respectively, a significant difference).
On the ethical investments side, 1 in 2 businesses (51%) expected to invest funds in ethical investments in the next 12 months. Again, larger businesses with £1m+ turnover were significantly more likely to expect to do so (36% <£1m turnover, 70% £1m+ turnover).
Our MillionaireVue Omnibus, also reported a similar movement with Millionaires, often business people, becoming increasingly aware and demanding of values-based investing.
Larger businesses were more positive than smaller businesses (61% up to £1m vs 78% £1m+).
A similar finding is noted for ‘greenwashing’ where the Financial Services, insurance and accounting sector is ranked 9th out of the 17 industries researched. Perhaps unsurprisingly, the energy sector is the top ranked industry for greenwashing.
Green light for banks to offer ESG solutions
More than 1 in 2 of all businesses, regardless of size, thought their business bank should offer them products and services to help it meet its ESG goals.
Businesses were open to ESG support from their bank across all 3 elements – Environmental, Social and Governance. Larger businesses were again more open to their bank approaching them.
When asked the likelihood of the business undertaking a range of actions if their main business bank demonstrate a positive attitude to ESG issues, the response was clear.
6 in 10 (58%) said it would make them more likely to ‘recommend them to other businesses’. With the CMA rating start-ups and established businesses with turnover up to £25m on their recommendation level and many financial organisations using NPS as a stakeholder KPI, this represents an amazing opportunity for banks.
Over 1 in 2 (56%) said it would make them more likely to ‘stay with them for the long term’. With acquisition more expensive than retention, this must be music to banks’ ears.
And with a significant impact on claimed product usage, deposits and borrowing, the incentive for banks to act is clear.
- 1 in 2 (51%) said it would make them more likely to ‘use them for a wide range of products’.
- Over 4 in 10 (45%) said it would make them more likely to ‘deposit with them’.
- And 1 in 3 said it would make them more likely to ‘borrow from them’.
Unsurprisingly, businesses with £1m+ turnover were more likely than businesses with less than £1m turnover to give a positive answer. A smaller market but perhaps a more lucrative one.
Win, win for business, for banks, for the UK
The majority of businesses think the Financial Services industry can make a difference to the UK’s transition and over 1 in 2 think banks should offer ESG products and services to their customers addressing Environmental, Social and Governance issues. There are clear benefits to banks of helping their customers on their ESG journey.
Businesses want it. Banks should want it. The UK needs it.
Business banking ESG support, a win-win for all.
The Savanta UK Business Tracker
A streamlined monthly tracker of Small Business Owners and Directors and Business Decision Makers at Mid Large Companies.