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09 Nov 2022 / Market Research

COP27: Is the road to net zero still a priority for UK SMEs?

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As businesses begin to fasten their belts for new year planning and financial forecasting in 2023, environmental consciousness will no doubt be on their radar. And as COP27 commences in Egypt, there will be a renewed sense of urgency for ramping up sustainable business practices after a turbulent year of juggling priorities.

In a defining era in the fight against climate change, COP27 is due to inspire nations and join forces in the battle for a greener planet. For a great number of businesses already on their journey to achieving a national Net Zero target, this dedicated effort between global leaders will only help to cement the internal efforts and really drive their ongoing initiatives into 2023.

Yet for many, this event will serve as a stark reminder of the missed opportunities and shrinking budgets as 2022 draws to a close. At this time, many businesses have taken a significant hit amidst rapidly increasing energy bills and widespread damage to the economy. And in a month that has so far witnessed the Bank of England’s base rate rise by 0.75% - the most significant jump in over thirty years - the UK’s economy is no doubt in a tumultuous state. In our latest Going Green for Business survey, we found that affordability was the biggest barrier when it came to being more sustainable, so whilst the ambition is there for many SMEs, the means to action these desires is not actually in place.

This time last year, we surveyed a number of our small businesses community and found that 100% of respondents felt there was not enough Government support to help smaller firms reduce their carbon footprint. In the same breath, 100% of businesses said they were considering making investments to reduce their carbon footprint in the next six months. This proves just how dedicated UK SMEs are to the green agenda, despite a landscape which continues to throw curveballs in their direction.

With the Government’s Net Zero target still set at 2050, it feels simultaneously far away that action can be taken but close enough that businesses are still going to struggle to meet this goal whilst the day-to-day expenditure of running a business continues to rise. What businesses need most at this time is the working capital to invest in areas of the business that matter most to them.

With the end goal of ‘ultimate sustainability’ often feeling a little out of reach for some businesses, by dedicating smaller efforts into greener financial investments, such as technologies and machinery, businesses can set the wheels in motion for reaching those targets. By investing money to save money, the road to Net Zero - and achieving more sustainable practice - will be made all the bit easier.

Flexible financing solutions and a lender who can take a holistic approach will equip businesses with the vital funds that they need to make environmental ambitions a reality. Whether investing in new product lines, ensuring a greener supply chain or funding a greener fleet, unlocking working capital or taking on specific finance solutions will be the only option for many businesses looking to contribute to the Net Zero agenda.

COP26 feels recent enough that the urgency is still fresh in our minds, but in so many ways the world has changed in those 12 months since. The hope is that COP27 brings with it a fresh call to action accompanied by some solutions. We know that businesses have ambitions to become more sustainable, and whilst many are putting one foot forward to make these ambitions a reality, many more are juggling a lot of other priorities and, sustainability, worryingly, is at risk of becoming a nice-to-have. The Government’s decarbonisation targets remain very much intact; will it now put systems in place so that businesses can keep up on the journey to Net Zero?

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