**UK**: Market conditions are pressuring UK businesses to prioritise operational continuity, often at the expense of sustainability initiatives. However, experts warn that neglecting sustainability could lead to significant long-term risks, urging companies to proactively manage environmental factors for better resilience and profitability.
Market conditions in the UK are currently presenting significant challenges for businesses, as noted by John Bullock, Head of Strategic Finance for Yorkshire & North East at Virgin Money, in an article for The Business Desk. These challenges are driven by a combination of macroeconomic factors affecting the wider British economy and microeconomic influences impacting specific sectors and regions. Moreover, the global political climate is intensifying these existing difficulties.
In this context, Bullock highlights a tendency among some businesses to prioritise immediate operational continuity over sustainability initiatives. He acknowledges that under pressure, these companies may view sustainability as a secondary concern, often categorising it as merely an ‘ESG’ compliance issue. However, he cautions that overlooking sustainability could lead to dire long-term consequences and that proactively addressing sustainability can yield substantial benefits.
According to a recent report by the Boston Consultancy Group, the physical risks associated with climate change could pose a significant threat to corporate profitability, potentially jeopardising between 5% and 25% of profits by 2050, depending on various factors such as sector and geography. Conversely, investments made towards climate change mitigation may result in returns that could reach five times the initial investment.
Bullock further cites research from Virgin Money indicating a growing awareness among businesses regarding the impact of ESG factors. In a discussion with Scott McFarlane from Virgin Money’s Business Sustainable Finance and Strategy team, it was revealed that nearly 60% of businesses believe that ESG considerations will significantly affect their operations in the next five years. Additionally, just over 40% of these businesses have established sustainability-related targets.
In light of these findings, McFarlane suggests that businesses may be approaching a pivotal moment where the costs associated with inaction begin to outweigh those of proactive sustainability measures. He posits the necessity for companies to create what is termed a ‘sustainability hedge’, which involves strategically managing risks to enhance long-term resilience as the UK transitions towards a decarbonised economy.
To aid businesses in the Yorkshire and North-East regions in this endeavour, Virgin Money has introduced the Sustainable Business Coach app. This innovative tool assists businesses in identifying key sustainability actions and provides strategic guidance to enhance their resilience and performance. This initiative is rooted in collaboration with the Future-Fit Foundation, a UK non-profit organisation focused on developing a comprehensive methodology, known as the Future-Fit Business Benchmark, for measuring and reporting sustainable progress.
Looking towards future initiatives, Virgin Money has announced the launch of its Mobiliser Fund in October 2024. This fund aims to finance the transition to a more sustainable economy, particularly for forward-thinking businesses striving for net-zero emissions. By 2027, Virgin Money has set an ambitious goal of ensuring that 20% of its business lending supports Sustainability Changemakers—enterprises whose core activities advance social or environmental causes—and energy-intensive sectors making significant strides towards net-zero.
The Mobiliser Fund will offer sustainability-linked loans with discounted pricing for businesses driving social and environmental change, helping to mitigate risks associated with a shifting economic landscape. As a participant in the Net Zero Banking Alliance, Virgin Money is committed to reducing its carbon footprint and aims to achieve net-zero emissions by 2050. The organisation actively cooperates with local relationship managers to partner with businesses and advisors, recognising the importance of the Yorkshire and North-East regions in fulfilling the UK Government’s broader environmental commitments.
Source: Noah Wire Services
