Funding Options is leading calls for the government to launch discounted green loans for small- and medium-sized enterprises (SMEs), to help the UK reach its net zero goals.
Ahead of the COP26 environmental summit in Glasgow this weekend, the business finance aggregator has joined forces with lender Swishfund and other fintechs to lobby the government for more environmentally-friendly business incentives.
These would include a government-backed loan scheme to deliver funding for loans which meet environmental, social and governance (ESG) standards. The government would cover 50 per cent of any losses on the scheme, and it would be administered through the British Business Bank (BBB) in a similar manner to the coronavirus business interruption loan scheme.
The group has also called for the creation of a £1bn ESG lending pool, which would be run by the state-owned BBB and match-funded by private capital. The fund would be used by lenders to make loans to ESG-focussed business or for ESG-related purposes.
This would bring the positive benefits of green-bonds, social-bonds and sustainability-linked bonds into the small business environment, the group said in an open letter.
“SMEs, not necessarily through fault of their own, are moving too slowly in the race to zero because they are not financially incentivised to make climate change a priority,” said Simon Cureton, chief executive at Funding Options.
“We’re at a critical juncture, from which decisive and affirmative action is required urgently to collectively open the path to net zero.
“Today, there is a very clear causal link between the economic productivity of our small business community and the nation’s carbon emissions. To stem and reverse that, these businesses require the requisite infrastructure and support to allow sustainability goals and commercial viability to co-exist – especially as they rebuild following the crippling effects of the pandemic.
“As a group we believe the green loans measures we are calling for will incentivise positive and long-term change for the benefit of the planet.”
A recent report by the BBB estimated that small companies are responsible for around half of the UK’s industrial emissions. However, according to a British Standards Institution survey, just 20 per cent of small businesses have committed to a net zero target. This compares with 50 per cent of larger businesses.