4 minute read
Lloyds Bank: A Net Zero future?
Advertising Feature
A Net Zero future?
Our role in averting a climate catastrophe
Keith Softly Head of Commercial Banking Intermediaries Lloyds Bank
SMEs will be essential in the UK’s transition to Net Zero carbon emissions, and they are keen to play their part. But they need more help.
The Government target of reaching Net Zero carbon emissions by 2050 is one of the biggest challenges faced by businesses in a generation. Firms will need to examine every aspect of their operations from supply chains to property energy efficiency and their use of transport, to play their part in reaching the target.
To better understand the scale of the challenge faced by SMEs, Lloyds Bank surveyed more than 1,000 SME leaders across the UK and held several in-depth interviews with sustainability experts and businesses to hear their hopes and concerns.
The findings in our special report From Now to Net Zero: A Practical Guide for SMEs, are uplifting, but also highlight the difficulties and frustrations felt by many firms.
SMEs are eager to play a part in the road to sustainability. Most (74%) are aware of the Net Zero target and an even greater proportion (89%) see sustainability as important to their business. But unfortunately, 40% of businesses said they did not know what Net Zero would mean for their business in practice.
Factors motivating SMEs to make changes ranged from cultural change and shifts in public opinion, to regulation, commercial opportunity, and the need to attract and retain employees. A journey to Net Zero can create new opportunities to thrive and grow and increasingly change will come from within, as employees at all levels increasingly expect and deliver action on sustainability.
Talking to SMEs revealed three principal areas where they faced a challenge around sustainability.
• Financial barriers – Finding the capital to invest in sustainability initiatives and uncertainty about whether such investment would deliver real returns.
• Limited control – How can they act to reduce emissions outside their own direct operations – for example in supply chains?
• Assessing their environmental impact – This remains logistically difficult and quite complex.
Key stages on the journey to Net Zero
From getting started, to being a net hero, these key stages reflect the day-to-day experiences of firms on a sustainability journey. Having a clear understanding of the stage they are at, will help businesses of any size to consider what next? And to move along their sustainability journey.
1 . Getting started
These businesses recognise the benefits of sustainability to their commercial success and preparing for the future but are also facing barriers to action – most likely around knowledge, control, finance, and time.
2. Short-term wins and employee engagement
Many will have already taken decisive steps towards sustainability, aiming for quick wins and seeking to engage staff in a sustainable culture. They are likely to have implemented initiatives that are aimed at achieving rapid commercial gains through cost savings and quick reductions in carbon footprint.
3. Measure, mobilise, and monitor
Measuring and assessing their current environmental impact and putting in place a system to monitor progress is the most fundamental driver of long-term sustained change. They are measuring their carbon footprint and setting objectives to reduce it.
4. Navigating the road ahead
These businesses have made a commitment to Net Zero, have a clear roadmap, established clear targets, and are measuring and monitoring their progress.
5. Heroes of Net Zero
Businesses are making significant commercial decisions and investment in line with their sustainability goals. They are often at Net Zero or very nearly there. They are motivated to help others on their sustainability journey and champion it as a part of their success story.
Every business is on its own personal journey to Net Zero. Those that ignore the issue, risk being left behind and will ultimately find their business cannot survive; those that embrace can turn sustainability into a commercial gain, delivering a competitive edge over less proactive rivals, enhancing their reputation, and potentially discovering whole new opportunities for business expansion.
How Lloyds Bank can help
Our report, From Now to Net Zero: A Practical Guide for SMEs, brings together the findings from our wide-ranging research and our proposals for where further action is needed from the authorities and other stakeholders. It is a practical guide, offering relatable entry points for firms at every stage, including links to a wealth of data resources and digital tools to allow SMEs to turn their sustainability ambitions into action. Read our report at lloydsbank.com/business/ resource-centre/insight/sme-journey-to-net-zero.html
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.
