Thriving on fostering a better tomorrow
In the wake of the COVID-19 pandemic, sustainability has become more important than ever as British and global businesses look to rebuild and recover. They see now as the prime opportunity to introduce sustainable strategies and solutions to drive consistent long-term growth.
More than 70 countries have now set targets (Nationally Determined Contributions – ‘NDCs’) to reduce emissions to net zero by 2050 and another 60 are planning to introduce these NDCs soon. So businesses need to be ready to operate in these net zero economies. 25% of businesses surveyed in the Spring 2022 Trade Barometer have said that they’re now putting greater emphasis on sustainability in the wake of the pandemic, and this number is continuing to grow. Another factor that has inspired businesses to start the transition to be more sustainable was the COP26 Climate Change Conference that took place in Glasgow last November. The conference saw governments, scientists and business leaders come together to accelerate action towards the Paris Agreement and keep the 1.5-degree target alive. The conference’s greatest success was the increase in awareness of climate change and its impacts and what people, businesses and governments can do to help reverse this.
Does it take a crisis to drive change?
The pandemic has no doubt concentrated minds on the interconnectedness of the global economy. We’ve seen how it’s vulnerable to unpredictable events such as pandemics, extreme weather events, political uncertainty and sadly more recently, conflict. These events can set the global economy back, as attention from governments, the media and the general population are diverted from the shared goal of a sustainable future in the short term. However, in their response and recovery, businesses can try to rebuild in a way that protects them from future events.
It's now important that as businesses rebuild, they look for green and sustainable growth opportunities, not just for their own financial resilience, but because the demand is starting to come from consumers and employees. We’re already seeing consumers looking at ways to adopt a more sustainable lifestyle, by choosing companies that act more sustainably compared to their competition. It’s important that all businesses recognise this change in consumer demand. This will spread its way through the supply chain as businesses look to boost their sustainability and green credentials.
This is one reason why almost a quarter of businesses (23%) now plan to invest in improving their sustainability over the next 12 months. This figure is only increasing - the Spring 2021 Trade Barometer reported this to be at 17% of businesses in the market.
This data was collected on businesses prior to the invasion of Ukraine by Russia, which has caused not just global political and emotional shockwaves, but economic implications as well. With the need for European nations to reduce reliance on Russian oil and gas, energy prices have increased at an exponential rate. This is pushing costs up for all businesses. This shows just how precarious our energy security is when we rely on oil and gas. Speeding up the transition to green energy will not only help foster a greener environment and but also reduce the rate of climate change. This will help build a more sustainable and secure economy with reduced risks for business.
Improvements in technology and investment in renewable energy over the past decade saw renewable energy become the cheapest electricity source in 2020 according to a report by the World Economic forum[1] published last year. With increases in the cost of coal and gas globally and the cost of renewable energy installation falling by up to 16%, using renewable power generation to pursue a net zero economy is no longer one of great expense.
Looking internationally through the sustainable lens
For businesses looking to trade internationally, sustainability becomes a tough balancing act. They will be faced with both challenges and opportunities as they aim to reduce their carbon and environmental footprint and drive improvements throughout their supply chains. In the Spring 2022 Trade Barometer, 17% of businesses warn that they need to shrink their carbon footprint. This represents a significant challenge as they rely heavily on logistics and shipping, where the greatest environmental impact usually lies.
Nevertheless, international businesses are determined and ready to overcome challenges with industry leaders ready to act by making changes within their control. By becoming more responsible and sustainable through fair hiring practices, employee diversity and inclusion, robust governance, and leadership within their businesses. They are also seeking these attributes from their partners and suppliers so they can abide with the relevant regulations and requirements of their industry, as well as moving to a greener domestic operation. In making these significant changes to their domestic business, they will be able to learn how to tackle the larger challenge of their international footprint.
Industry changes are beginning to happen as shipping and freight companies start to look at the deployment of alternative fuels such as biofuels and hydrogen along with new technology such as electric, hybrid and more fuel-efficient ships and road transport. Other ways include using data analysis to understand the most efficient and sustainable solution at each point in the supply chain, to predict the congestion points. These are just some of the many solutions available to international businesses, and whilst these might come with a significant opportunity cost, the demand for more sustainable products and services with genuine credibility makes the work and short-term higher cost worthwhile for sustainable business growth in the future.
Beginning the journey
Starting on the green transition can be a challenge for any business due to its complexities, the speed in which the economy is moving towards net zero and the demand for more sustainable businesses and supply chains. Many businesses need support as they pursue a responsible business strategy while trying to grow at the same time. For example, in the Spring 2022 Trade Barometer, over 20% of businesses said that they’re concerned about their ability to source goods and materials while staying on target to meet their sustainable goals.
However, with the right support, many businesses are committed to embracing sustainability as a commercial imperative as well as a principle. They’re making changes now, not because of customer demand or regulation, but because it’s the right thing to do to preserve the world for future generations.
How we can help
We’re putting ESG and climate change action at the centre of our strategy. We want to act responsibly and lead the way for our customers, helping them achieve excellence in sustainability. We have an array of green, social, and sustainable solutions available to our customers both from a financial and non-financial perspective. Our dedicated relationship teams and SMEs are ready to help your business achieve its sustainable goals.
We also have a team of sector experts, who work with businesses to provide both financial and non-financial solutions tailored to their respective sectors. They understand the particular challenges that businesses in their sectors are facing and work with specialists to support businesses in overcoming these challenges. Our sector experts also work closely with our international specialists to help businesses with both their domestic and international growth. As well as our sector expertise, our relationship teams across the UK are able to assist businesses with a range of solutions to help realise their growth ambitions, whether that’s in the UK or in overseas markets. This wealth of expertise will soon be available all in one place with the launch of our new Santander Navigator service. Santander Navigator will bring together ecosystem providers, events, market insights and more, all tailored to specific businesses, sectors, and functions. Keep an eye on our website for more news.
To hear more about our approach to sustainability, please contact: ClimateChange@santander.co.uk
If you'd like more information about our international solutions, please email: international@santander.co.uk
For more information, please read the full Trade Barometer report
[1] World Economic Forum – 05th July 2021 - https://www.weforum.org/agenda/2021/07/renewables-cheapest-energy-source/