Poll: Sustainability concerns prompting smaller businesses to redraw their supply chains

Sustainability concerns are prompting small and medium-sized businesses to reappraise their supply chains and broker new deals with firms that are closer to home or have better environmental credentials, research carried out by NatWest suggests.

The latest results from the bank’s quarterly Sustainable Business Tracker, which explores attitudes to sustainability in UK firms of under 249 employees, notes that prioritisation of sustainability is at its highest point since the start of the pandemic, at 44 per cent.

Some 46 per cent of respondents said they had recently switched to a domestic supplier due to sustainability concerns, and a further 20 per cent said they were looking to re-shore at least part of their supply chain over the year ahead in order to boost sustainability .

Meanwhile 28 per cent of companies surveyed said they had switched to a supplier with greater environmental credentials, with a further 20 per cent noting they planned to do over the coming years.

“Global supply chain pressures have focused SME’s priorities on switching to UK suppliers,” said Andrew Harrison, head of business banking at NatWest Group. “This ensures they have the consistency they need while matching up to their increased sustainability priorities.”

The report notes that interest in three of five ‘sustainability priorities’ included in the report had increased since March, with the number of first reporting green energy as a top priority shooting up by 41 per cent to 51 per cent in the wake of soaring energy prices.

Recycling was picked by the most businesses as a top focus area, with 60 per cent noting it was their biggest priority, followed by cleaner business processes, at 54 per cent.

However, the research also points to a paring back of sustainable product launches since the start of the year. Less than one in five companies cited sustainable product launches as a high priority for the year ahead, down from one in four in March, and the lowest since the survey began in February 2020, according to NatWest.

Harrison noted that 50 per cent of the UK’s carbon reduction could be delivered by the SME sector. “This could also unlock a £160bn opportunity for them,” he said. “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. At NatWest we are doing our best to support them.”

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