Nine in Ten Businesses think Sustainability will Impact their Future Operations

Date:

Most businesses have a significant gap between their awareness and action when it comes to Environmental, Social and Governance (ESG) targets.  

Research from Virgin Money highlight that while 68% of decision makers within SMEs are familiar with the concept of ESG targets, more than half (54%) have not yet set targets for their business. This is despite over two-thirds (71%) of them acknowledging that adopting ESG practices is important to their customers. This disconnect shows the challenges businesses face in translating awareness into actionable strategies.

Confidence in understanding the necessary steps to meet ESG targets is holding firms back from making necessary changes, with one in four (25%) decision makers within SMEs not being confident about the specific actions required.

Concerns about competitiveness and costs are also prevalent, as one in four (26%) who have set ESG targets for their business, believe that meeting these goals could make their business uncompetitive, and one in three (34%) think it’s too expensive to implement. However, the primary challenge businesses with ESG targets face in meeting their goals is that 51% are waiting for regulatory or government guidance before making the necessary changes.

90% believe that sustainability will impact how their business operates within the next five years, with over half (58%) expecting a major or moderate impact that could require a change in business model or strategic review.

To help businesses navigate these challenges, Virgin Money has launched the Mobiliser Fund, with an ambition to provide 20% of its business lending balances to businesses driving the transition towards the next economy, by the end of 2027.

Of the overall 20% target, half will be directed to customers whose core goods and services accelerate social and/or environmental change – for example, helping businesses depend less on non-renewable energy, or generate less waste.

The remaining 10% target will support businesses who operate in traditionally energy-intensive sectors, such as agriculture and manufacturing, who are taking proactive steps to transition to a net zero economy.

Scott McFarlane, sustainability lead for business bank at Virgin Money, said:

“Many businesses know that they need to take action to move to a more sustainable future, but there’s a critical gap between that awareness and action being taken. At Virgin Money, we recognise the challenges businesses face in this transition, from understanding the necessary steps required to concerns about costs and competitiveness.

“Our new Mobiliser Fund is designed to help bridge this gap by providing not only financial support – such as Sustainability-Linked Loans for smaller businesses – but also valuable resources, like our Sustainable Business Coach app which helps businesses set ESG targets and measure progress against them.”

Virgin Money’s Mobiliser Fund covers a variety of support options for businesses to help drive environmental change. This includes:

  • Agri E Fund: A dedicated fund to support farmers create a greener future.
  • Sustainability Linked-Loans: Offering financial incentives for businesses that meet the sustainability targets within the Sustainable Business Coach app.
  • Asset Finance: Businesses can spread the cost of the big buys that help support their sustainability goals.
  • Sustainable Business Coach: The app provides an objective assessment of a business’ environmental, social and governance (ESG) impacts and gives advice on how to improve.

The new sustainability lending targets echo Virgin Money’s objective to be net zero in its own operational emissions by 2030, and net zero in all direct and indirect emissions, including everything they finance, by 2050.

Share post:

Popular

More like this
Related