Linda Allardyce, corporate sustainability expert at SaveMoneyCutCarbon, explains why businesses should embrace Environmental, Social and Governance (ESG) strategies in order to survive the looming economic recession.
A 40-year high inflation, spiralling energy costs and a looming recession has severely dampened British business confidence, putting the breaks on economic growth for the next year. The projected contraction of the country’s economy by 0.6% has presented a bleak outlook for companies, who will likely face a tsunami of costs in the next few years. Testament to this, the British Chambers of Commerce project that less than half (43%) of UK firms are expecting profitability in the next 12 months.
The current energy crisis is currently eating into a majority of businesses’ profit margins, with SMEs across Britain having faced an average gas bill increase of over 250% in the last year alone, according to Cornwall. To stem the tide of weakening performance, corporate sustainability experts, SaveMoneyCutCarbon, has argued that stronger ESG strategies are an essential to navigate turbulent socio-economic climates. Indeed, new research from the firm has found that in the wake of the energy crisis, over half (51%) of employers in the UK still don’t know where or how to start reducing their carbon emissions.
In what seems to be an overwhelming and challenging landscape to navigate, businesses should look to formulate solid and effective ESG plans to assist with alleviating the current economic pressures. SME’s account for 99.9% of the UK business population and nearly half of the turnover made in the country’s private sector. Small businesses that can demonstrate their ESG commitments in hard numbers have a competitive advantage because they’re able to gain greater access to capital, combat rising operating expenses, manage risk more effectively, and minimise regulatory interventions that may slow down growth. According to a study conducted by the Association of MBAs, an 11% increase in an SME’s ESG performance is likely to decrease its credit risk by 3.5%. For instance, a major water utility enterprise, achieved cost savings of around $180m per year due to initiatives aimed at improving preventive maintenance, refining spare-part inventory management and tackling energy consumption – according to management consultants, Mckinsey & Company.
Currently, 42% of SME owners in the UK believe that it’s important to be sustainable, but struggle because of a lack of guidance – according to Ecologi. With this reason, SaveMoneyCutCarbon, launched their unique ‘Carbon Mentor’ scheme, with hopes to help businesses take the first step in truly making a difference amidst the climate crisis. This service includes a tailored strategy created specifically for carbon reduction and reducing energy bills.
Linda Allardyce, corporate sustainability expert at SaveMoneyCutCarbon, explains why businesses should embrace ESG strategies in order to stay afloat:
“Global corporate sustainability has taken a blow due to impacts of greenwashing. However, while governments can establish and enforce rules around this area, we believe that there is a need to create new ways of doing things – including new business practices with positive measured outcomes.
“Research shows that 3-in-4 Brits say that they would like to see CEOs of organisations take a lead on social and environmental change – not wait for governments to impose it. But sadly, it seems to still be a box-ticking exercise to placate shareholders and markets.
“In order to see corporate sustainability and ESG goals thrive around the world, businesses must take a look within to see what needs to be done on their behalf – and with an increase of energy prices on the horizon, this should be the driving factor for businesses to cut costs and by doing so, contribute to reducing carbon emissions.”