UK businesses increase investment in green energy as global supply chains and energy prices pinch

With energy prices soaring and supply chain issues continuing unabated, UK SMEs are looking at investing in sustainable initiatives with a greater urgency than ever before.

As the UK’s largest business bank, NatWest conducts a quarterly Sustainable Business Tracker, gauging how purchasing decisions are being influenced by climate concerns.

Our latest findings show:

• One in six SMEs intend to generate onsite green energy by 2023
• One in three SMEs plan to invest in electric vehicles or charging points by next year
• 21% of SMEs are set to train or hire staff in sustainability in the next year
• A strong SME recovery in March, led by service sector growth

The increasing emphasis on green energy represents an exciting opportunity for UK SMEs. As identified in our Springboard to Sustainability report, 50% of the UK’s carbon reduction ambition can be delivered by the SME sector. This could also unlock a potential £160 billion revenue opportunity.

However, while intention to invest in sustainable initiatives is encouraging, input price inflation hit a record high in March, prompting fears among many SME owners, who cite increasing costs as a key constraint on sustainability action.

At NatWest, we believe that sustainability, recovery, and growth go hand-in-hand. Through this incredibly challenging time, SMEs must be equipped with the tools and support to make the most of the opportunities that lie ahead.

To play our part, we are putting SME customers at the heart of our climate approach, supporting businesses looking to make a difference with practical tools and guidance.

We also recognise that finance is vital to successfully addressing climate change. NatWest has pledged to provide £100 billion of Climate and Sustainable Funding and Financing (CSFF) by the end of 2025, delivering £17.billion to date.

Alongside CSFF commitments, we have provided £728 million in green mortgages to retail customers, as well as collaborating with Cogo, becoming the first European bank to provide customers with an estimated carbon footprint associated with monthly spend.

Driving forward towards becoming the leading UK bank addressing climate change, we have also introduced a new green loan product, helping SMEs to finance business assets, such as solar panels, electric vehicles, forest respiration or heat pumps on commercial buildings.

Through our latest Sustainable Business Tracker index, we know that SMEs are ready and willing to invest in these green initiatives. We estimate that around one in three SMEs (35%) will have invested in electric vehicles or charging points by next year, with a further one in six (17%) intending to generate their own onsite green energy by 2023.

Our package of financial support is designed to meet the climate challenge head-on, opening up opportunities for sustainable growth options for qualifying SMEs and reflecting the societal benefit of delivering climate action.

We cannot underestimate the power of small changes to make a big impact. We will stand by small businesses throughout the UK to help them build for the future, reduce emissions and achieve exciting growth opportunities that move towards a green economy for us all.