One in five small to medium sized businesses falling short on green credentials

29 April 2015

  • Almost a fifth (19%) of SMEs not doing enough to make their businesses environmentally responsible according to a new study from Lloyds Bank
  • More than two thirds (71%)of these businesses say they do not understand the commercial benefits of being environmentally responsible
  • A quarter (25%) of small businesses say environmental goals are a top three priority for 2015
  • Lloyds Banking Group’s 2015 SME Charter commits to help 10,000 businesses become more sustainable by 2020 , with a new planning tool 

British small and medium sized businesses (SMEs) are putting their competiveness and reputation at risk because they are not doing enough to improve their environmental credentials, according to new research from Lloyds Bank Commercial Banking.  

The findings show that one in five (19%) firms accept they are not doing enough to take on environmentally responsible practices and that although a quarter (25%) of SMEs say green issues are a top three priority for the year,  the vast majority (71%) admit they do not understand the positive impact environmental responsibility can bring.

To help businesses improve their environmental credentials Lloyds Bank has launched an online planning tool. The tool allows firms to build their own action plans, in which they can set goals – for example, to make better use of resources, or to find new opportunities for cost savings. Businesses can also use the planning tool’s range of templates and guidance notes, to write their own Environmental Policy, which they can then use to prove their environmental credentials to customers, stakeholders, or in supply chain negotiations. 

Adrian White, Managing Director of SME Banking, Lloyds Banking Group said: “The importance of environmental responsibility can often be overlooked and our research shows that many businesses do not understand the benefits, but it is an issue that has become increasingly important, not least to customers.

“Being environmentally responsible can help reduce business risks and can also bring lasting benefits – from lower costs and a wider customer base to better staff morale and retention.

“Some businesses might see environmental responsibility as costly or irrelevant but with our new online planning tool we hope to help firms overcome these perceptions. It will help businesses look at the gaps they need to address and the practical steps they need to take. In our 2015 SME Charter we have pledged to help 10,000 SMEs to engage in more environmentally responsible practices by 2020 and we hope that through our new sustainability portal we will succeed in reaching this goal.”

Engaged SMEs and the benefits reported

Eight out of ten businesses (81 per cent) that have implemented sustainable business practices believe there are clear benefits in doing so:

  • More than two fifths (46 percent) believe it helps reduce their costs 
  • Over one third (35 percent) believe customers respond positively because of it
  • Over a quarter (27 per cent) feel it makes them a more attractive employer
  • Just under one in five (18 per cent) believe it improves their profitability

The risks of overlooking sustainability

Whilst many SMEs are seeing the benefits, some are influenced to take action by the risks of not doing anything;

  • Nearly half  (45 per cent) believe not being environmentally responsible could mean they fall foul of legislation
  • Nearly half  (45 percent) fear that a lax attitude to environmental responsibility will make them appear outdated
  • Almost a third (31 per cent) see customer backlash as a risk to neglecting responsibility to the environment
  • Over a quarter (27 per cent) believe it will impact on their competitive edge

SMEs that aren’t engaged

Amongst those SMEs that aren’t taking steps to become more environmentally responsible just over half (58 percent) say they have never thought about the need to do so. Almost one third (30 per cent) of firms do not believe there are any risks in failing to adopt environmentally responsible practices.