NatWest: SMEs switch to UK suppliers to drive sustainability

According to research conducted by retail banking company NatWest, UK SMEs are switching to UK suppliers to reduce their supply chain carbon footprint

With 90% of an organisation’s emissions coming from its supply chain, Leading UK retail banking company, NatWest, reports encouraging signs that SMEs are seeking to reduce their carbon footprint. 

46% of SMEs switch to domestic suppliers

According to NatWest’s 2022 Q3 ‘Sustainable Business Tracker’, SMEs are showing the strongest sustainability intentions since February 2020, an encouraging sign that SMEs are seeking to reduce the carbon footprint of their supply chains.

Insights from the report highlighted that 46% of SMEs have already switched to domestic suppliers to tackle their sustainability concerns. 

In addition, a further 20% are looking to re-shore at least a part of their supply chain to boost sustainability over the next year, NatWest, therefore, suggests that 66% of SMEs will have switched at least some of their external vendors to domestic suppliers by the summer of 2023. Over the next five years, it is expected to rise to 75%. 

“Global supply chain pressures have focused SME’s priorities on switching to UK suppliers. This ensures they have the consistency they need while matching up to their increased sustainability priorities. It’s good news that it’s been paired with a higher prioritisation of low carbon energy consumption as well as ambitions to increase recycling,” commented Andrew Harrison, Head of Business Banking at NatWest Group.

“NatWest’s Springboard to Sustainability report, published in October 2021, found that 50% of the UK’s carbon reduction ambition can be delivered by the SME sector. This could also unlock a £160 billion opportunity for them. Sustainability, recovery and growth go hand-in-hand and SMEs need to be supported to know how to make the most of the opportunities that lie ahead. We at NatWest are doing our best to support them.”

Environmental credentials critical for future partnerships

In addition to switching to domestic suppliers, many SMEs are readjusting their global supply chains to suppliers with environmental credentials - 28% of those surveyed by NatWest have already done this, with a further 20% expected over the next year. 

Rising sustainable priorities

According to the Sustainable Business Tracker, low carbon energy consumption has seen the biggest rise in prioritisation, with 51% of SMEs reporting that green energy will be a high priority for the year ahead - up from 42% in March. 

Plans to boost low carbon energy include the installation of on-site solar panels and investing in battery storage and electric vehicle charging infrastructure. 

In addition to energy consumption, SMEs have also increased their priority in increasing recycling (60%) and having cleaner business processes (54%). 

Despite SMEs experiencing a considerable slowdown in business activity growth, such trend has not prevented the increase in prioritisation for sustainable action, with 43% reporting it as a priority in June - up from 40% in March. 

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