Covid pandemic threatening business push for sustainability
Just how important are protection of the environment, supporting positive social progress and making responsible, well-governed decisions, to consumers in 2020? Are SMEs placing enough emphasis on this sustainability agenda? And how has COVID-19 impacted the picture?
These are all questions we sought to understand via a recent survey of senior SME decision-makers and consumers across the UK. The results painted a mixed picture. While sustainability now seems to be firmly on SMEs’ radars and many have taken positive action, there is still significant work to be done.
Sustainability is important – but not enough businesses have set targets
The research found that 85% of SMEs now believe that sustainability is important to their business, which is encouraging. However, only 43% currently have any targets in place. This should perhaps raise some alarm. Setting sustainability goals – and working towards them – should arguably be a key part of any business strategy. It is a sure way of measuring progress and staying on track.
When asked why they had not set targets, cost was identified as a key block by a fifth of businesses. A further fifth, meanwhile, think that there is not enough understanding of the link between sustainability and business success. Lack of available technology and external factors – such as supply chain – were further reasons given.
It’s clear that these are all areas where greater support and education are needed.
Pandemic threatens progress on sustainability
The research also raises some concern that sustainability – perhaps unsurprisingly - may be slipping down SMEs’ list of priorities as a result of the pandemic. Just 14% identified sustainability as a key business priority for the next 12 months. Understandably at the moment, business survival (53%), business growth (45%) and customer growth (45%) were placed higher.
While this shift in priorities is to be expected given the current climate, the neglect of sustainability over the longer term would be a problem. Especially as the research also suggests that consumers are becoming more aware of companies’ credentials in the area.
Two thirds of consumers surveyed stated that sustainability is now important when selecting which business to buy from or service to use. Around a quarter (26%), also say that they will check the sustainability efforts of the companies they purchase from more in the next year than they do currently – suggesting the issue is increasing in importance.
These figures strongly imply that SMEs may be underestimating the impact of failing to take action.
While COVID-19 has brought an array of new challenges and SMEs are understandably focusing on survival, leaders must ensure that sustainability remains a priority – or they could lose out.
Building for the future
The pandemic has taught all of us a lot of lessons. One being that ‘going back’ is not the answer. Businesses need to build back better – and keep sustainability front of mind. We also see that many of those that take up this challenge find more efficient ways to operate, which then improves their profitability.
If enough businesses step up, it’s possible to shift the UK economy onto a more resilient path.
This is why, in partnership with Future-Fit Foundation, Virgin Money has launched a new beta benchmarking tool to help businesses improve their sustainability efforts – and reward them financially for doing so.
SMEs can use the tool to measure the Environmental, Social and Governance (ESG) impact of their business operations and immediately be provided with tangible objectives to work towards. When the tool moves out of its live-test version, it will be used to help us provide easier access to, and lower cost of, finance for those customers who pioneer what it means to be a truly sustainable business.
This is an issue that requires a combined effort – from businesses, from policymakers, from consumers and from us. The pandemic has brought unprecedented change and challenge, but we cannot let it derail us from progressing the essential sustainability agenda.
To find out more about the help available to your business, click here.