- High proportion of consumers now consider sustainability when selecting businesses to buy from – and this is set to increase.
- New research also raises concerns that the issue may slip down SMEs’ list of priorities in the wake of the pandemic.
- Virgin Money, in partnership with Future-Fit Foundation, is launching a new benchmarking tool to help businesses improve their sustainability efforts – and reward them financially for doing so.
While 85% of SMEs surveyed believe that sustainability is important to their business, only 43% currently have targets in place – according to new research by Virgin Money.*
The figures come as Virgin Money launches a beta version of its new Benchmarking Tool, in partnership with Future-Fit Foundation. The tool is open to any UK business wanting to understand how it can contribute to a more sustainable future, while increasing its own resilience to future shocks. Used in a banking context for the first time, the downloadable tool walks users through a series of questions and uses a straightforward scoring mechanism to help them quickly get a sense of their environmental and social impacts. It also offers tailored suggestions for improvement.
Virgin Money’s research raises some concern that sustainability may slip down SMEs’ list of priorities in the wake of the pandemic. Just 14% of senior decision makers in SMEs surveyed identified embedding sustainability as a key priority over the next 12 months.
Graeme Sands, Corporate & Mid-Market Director at Virgin Money, said: “While the disruption of COVID-19 has brought on an array of new challenges to be navigated, businesses need to ensure that sustainability remains a priority. At Virgin Money we’re committed to improving our own impacts, but we know we are in a position to help companies do their bit too – and that’s why we decided to team up with Future-Fit to design and launch the beta version of this tool.
“As well as supporting business in its sustainability journey, once the benchmarking tool is fine-tuned we will provide lower cost, and easier access to, finance for customers pioneering what it means to be a sustainable business.”
Dr Geoff Kendall, CEO of Future-Fit Foundation, said: “Right now, SMEs across the UK are understandably focusing on business survival. But if the pandemic has taught us anything it’s that our economy was nowhere near as resilient as many of us thought. Going ‘back’ is not the answer. We need to build back better – and with simple, practical advice, any business can make a few small changes. If enough businesses step up, it’s possible to shift the UK economy onto a more resilient and regenerative path. That’s exactly what we designed the Future-Fit Business Benchmark to do – and we’re delighted to partner with Virgin Money, to translate it into this new, easy-to-use tool tailored specifically to the needs of UK SMEs.”
The research also highlights why SMEs haven’t set sustainability targets in their business yet. The perceived cost of introducing sustainability goals was highlighted by 21% of SMEs, while a further 19% think there isn’t enough understanding of the link between sustainability and business success. Lack of available technology (9%) and external factors (e.g. supply chain) affecting ability to deliver commitments (9%) are also reasons given as to why some SMEs haven’t implemented a sustainability targets for their business.
When it comes to incentives for reaching their sustainability goals, 39% of SMEs who have targets said improved reputation would push them to achieve their objectives, a third (33%) said brand recognition would help and another third (33%) said access to financial incentives would help them to reach their targets.
Consumers are also becoming more aware of a company’s environmental, social and governance credentials, with two thirds (66%) stating that the issue is somewhat or very important in their decision making. Around a quarter (26%) also say that they will check the sustainability efforts of the companies they potentially purchase from much or somewhat more than they do now in the next year. This suggests SMEs could be underestimating the growing importance placed on this by consumers.
However, it’s not as clear a picture when consumers are asked if they would be willing to pay more for products and services that provide an environmental or social benefit. Of consumers surveyed over a third (37%) said they would be very or somewhat willing to pay more for an airline service, over three in 10 (31%) said the same about financial services, and 42% would be very or somewhat willing to pay more for fashion.
* Surveys conducted by Censuswide: SME – 1,006 respondents who are senior decision makers in SMEs, survey conducted 19 to 23 October 2020. Consumers - 2,011 nationally representative respondents, survey conducted 19 to 21 October 2020.
To download the benchmarking tool visit https://www.virginmoneyukplc.com/corporate-sustainability/future-fit/