Energy price rises halting SME green efforts
In response to continuing energy price hikes and the energy support packages proposed for the UK’s small business community, NatWest has joined forces with the Federation of Small Businesses to analyse the impact that rising energy bills are having on SME’s ability to take action on climate.
Whilst the FSB welcome the latest government announcement regarding price caps and extended support for smaller businesses that are less likely to be able to invest in their own energy infrastructure, both have expressed concerns that the rising cost of living is directly stalling the UK’s efforts to reach Net Zero by 2050 as SMEs are forced to focus on immediate cashflow concerns over long-term sustainable investment.
The UK’s SMEs have previously expressed widespread positive desire to invest in green energy. Latest data from NatWest’s Sustainability PMI report revealed that more than half of UK SMEs (51%) reported investing in green energy as a high priority for the year ahead, the largest percentage in the survey history. From October, NatWest will lower the threshold for Green Loan applications to £25,000, to help qualifying SMEs invest in sustainable energy solutions such as solar panels, improved insulation or heat pumps.
Andrew Harrison, head of business banking, NatWest Group said: “We are at a critical moment in our response to the climate crisis. The current economic environment is such that many SMEs who are ready and willing to invest in green initiatives still feel unable to do so as rising energy costs shift their focus to the short-term.
“The long-term impact is that our nation’s small businesses are left behind the curve on green innovation, less efficient than competitors, more exposed to future supply-side shocks and unable to make their crucial contribution to UK climate targets. We must support long term investment into new, clean technology that will lead to lower energy prices for longer and a much more resilient UK energy infrastructure.
“As the largest supporter of UK business, it is our duty to help guide SMEs through the current challenges and build a sustainable future.”
Martin McTague, chair of the Federation of Small Businesses added: “We are enormously relieved that the government has recognised the urgency of the energy pricing problem and we welcome the most recent support measures introduced.
“However, there is still a great degree of uncertainty in the market with many of our network of small businesses facing a cliff edge beyond the next six months. This is reducing their ability to focus on the long term and achieve the sustainable growth that is critical to the success of the UK economy”.
To support SMEs through the cost-of-living crisis, NatWest has committed to:
- Providing £100bn of Climate and Sustainable Funding and Financing to customers by the end of 2025
- Offering arrangement fee free Green Loans and green asset finance to qualifying SMEs investing in eligible clean buildings, energy, transport and agriculture
- From October, NatWest will lower the threshold for Green Loan applications to £25K, to help qualifying SMEs investing in things like solar panels, electric vehicles or heat pumps.
- Tailored support for the most impacted sectors including a £1.25bn lending package for 40,000 agriculture customers
- £2m hardship fund to provide grants and support delivered through partners including Citizens Advice, Step Change and Money Advice Service
- Lowering the threshold for its Green Loans offering for SMEs from £50,000 to £25,000, ensuring that more businesses can access funding to help transition to more sustainable practices
- A free to use Carbon Planner designed to help all UK businesses understand and reduce their carbon footprint to help them go and grow greener
- Proactively contacting over 2.5 million personal and business banking customers to offer support and information on cost of living
- Removing the minimum charge for Business Current Accounts and freezing the standard published tariffs on these accounts for the next 12 months, with a commitment to not making any increases to published fees
