• Our Sustainable Business Tracker has revealed that slower recovery from the pandemic is holding back SME sustainability plans for this year

• It stated that 41% of UK SMEs cite sustainability action as a high priority, down from 44% in February 2020, while 60% large companies report sustainability action as a high priority, up from 57%

• Meanwhile, SMEs reported another month of strong jobs growth and remain upbeat regarding the 2022 outlook, despite disruption caused by the Omicron variant

Our first Sustainable Business Tracker has found business performance by SMEs is trailing behind that of their larger counterparts, due to Covid-19 restrictions, rapid cost inflation and supply disruption.

The survey data revealed that UK SMEs have reduced their focus on sustainability action in comparison to the levels seen prior to the pandemic. Sustainability plans have been particularly affected by the need to make further progress on recovery following pandemic-related lockdowns.

SMEs have also faced rapid increases in expenses, which, in turn, drove an unprecedented rise in selling prices during December 2021.

Nevertheless, firms remain highly optimistic about 2022 growth prospects, with confidence holding steady. Employment at SMEs also increased at a faster rate than that seen for larger companies.

Andrew Harrison, Head of Business Banking for NatWest, observed: “It’s been a challenging 18 months for UK SMEs, and not surprising therefore that the climate agenda has slipped back for some small businesses.

“But it’s important that SMEs know sustainability measures can boost their recovery, and even fuel their growth – for example through increasing efficiency, lowering energy bills and by future-proofing their operations.”

Our Sustainable Business Tracker is a new quarterly survey that reviews the progress the UK SME community is making in implementing sustainable and environmentally responsible practices, as well as the latest green attitudes and priorities and general trends. For example, the first survey reveals the biggest influence on SMEs’ efforts to improve environmental sustainability is customer expectations, followed by government legislation 

NatWest’s A 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 £160bn revenue opportunity for smaller business owners. 

“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,” said Andrew Harrison.