Increasing demand for high environmental standards is providing businesses who invest in ESG with a competitive advantage and the opportunity to increase revenue, new Paragon Bank research has found.
Conducted by Opinium, the research of over 500 UK SMEs found that 61% of firms take an active interest in the ESG credentials of their suppliers, with 51% refusing to work with businesses with a poor environmental record.
Concern over the ESG record of a business continued into enquiries made by customers with 53% demanding to know about an SME’s own standards. This is led to 57% of SMEs considering ESG standards as important to their business and only 14% who do not.
With the increased interest in ESG standards, a majority of SMEs are now both actively investing in new equipment to improve their standards (59%) and are planning to increase future investment (58%).
As well as investing to improve ESG standards to meet the demands of customers, SMEs are also moving towards more sustainable working practices to reduce energy bills (58%).
The research identified both the level of interest and lack of interest shown towards ESG standards:
- Interested in supplier’s credentials (Agree 61% /Disagree 12%)
- Actively investing to improve (59% / 13%)
- Plan to increase investment (58% / 12%)
- Investing to lower energy bills (58% / 14%)
- Very important to our business (57% / 14%)
- Customers demanding to know credentials (53% / 22%)
- Won’t work with company with poor ESG (51% / 17%)
Commenting on the research findings John Phillipou, Paragon’s Managing Director of SME Lending, said: “The move towards more sustainable and environmentally friendly working practices is a win-win for SMEs.
“As the research identifies, customers are now looking to work with companies that have strong ESG policies. Those that do will have a competitive advantage, creating fresh business opportunities and the ability to increase revenue thanks to providing clients with the standards demanded by their own customers.
“The increased energy efficiency of the new tech also provides the potential for long-term cost savings, with SMEs able to reduce the costs at the same time as increasing business.”
He continued: “Investing in green technology also comes with the vital benefit of helping to support and protect the environment – and SMEs seeking to improve their ESG will play a key role in preserving and improving our environment for generations to come.
“Paragon is committed to supporting businesses making the transition to more environmentally friendly working practices. With an increasing range of electric and alternative fuel powered assets coming onto the market, now is the time for SMEs to start planning for the future and investing in their ESG standards and take full advantage of the opportunities they can provide.”
