Funding report: The changing climate

By Ged Henderson

03 Feb 2022

Lancashire businesses are being urged to meet the challenge of Environmental, Social, and Governance (ESG) head on or risk losing their funding line.

Experts are warning that 2022 will see the focus on climate change and sustainability become increasingly crucial when it comes to decision making by lenders and funders.

Graham Rigby, SME accounting expert with Azets in the North West, says the issue is already having a “significant impact” on those decisions and those too focused on the short-term may be putting the future of their businesses at risk.

He also predicts that lenders, suppliers, customers, and employees will all demand a “roadmap to a net zero strategy” going forward, while failure to address ESG could be catastrophic.

A recent survey of SME company leaders revealed that just one in ten believe ESG will impact on their long-term plans and almost a quarter have not reviewed their business model in the past 12 months.

However, Graham says business in Lancashire must take a more proactive approach to ESG as part of regular business model reviews.

He says: “A sharper focus on the short-term is perhaps to be expected as SMEs focus on immediate recovery and growth, with on-going concerns over staffing levels, economic instability and digitisation an ever-present issue.

“However, with funding likely to be harder to come by and banks increasingly looking at sustainability and ESG policies as a condition of lending, businesses should also be thinking ahead.

“ESG will keep growing in significance and will impact decision making by lenders, suppliers, customers, and employees.”

Jamie Grimshaw, Preston based investment executive at FW Capital, agrees that the green agenda is becoming more important in lenders’ decision making and that will continue to be the case.

He says: “Lenders are looking at the positive effect on the environment and that is going to have more of a bearing on the decisions they make.

“If you’re putting forward an application you are going to have to show you are making strides in that direction.

“If you are asking to borrow money and you can show that it will be spent making a positive impact on the environment that will help your application.”

Looking ahead to the next 12 months, Jamie believes businesses will continue to face challenges around supply chains and working capital, which will impact their funding needs and decisions.

Paul Leyland, investment manager at private equity (PE) house Maven Capital Partners, agrees. He says: “The past 18 months have seen businesses across the region increase their levels of indebtedness, often by taking advantage of the government’s generous Coronavirus initiatives.

“As these facilities are starting to be repaid, many business owners are now facing the reality of debt in their business, combined with rising costs and widely publicised logistical challenges”.

He adds: “This perfect storm has meant an increase in demand from businesses who are now seeking equity funding to re-capitalise their balance sheets or looking to take advantage of the market opportunities created by overleveraged competition.”

The rise of ESG in corporate thinking will also have an impact in the private equity sector. Last year saw UK PE transactions at their highest levels since 2017, with tech businesses leading the way.

It is a trend Paul sees continuing this year. He says: “Following the COP26 summit, we expect those technologies that drive sustainability, counter climate change and contribute towards corporate ESG requirements will likely come to prominence.”

Jess Jackson, head of investment at GC Angels and co-founder of Fund Her North, adds: “We’re seeing an increase in ‘tech for good’ companies with wide-reaching implications.

“This is an arena where angel investment can really make a difference. By pairing these businesses with the right investors, we can play an important role in expanding the impact of their technologies.

“Importantly, there is valuable work to be done to create a more equal investment landscape for businesses with black and minority ethnic founders and female founders.”

Susan Haslem, relationship director at NatWest banks says there is a £160bn-plus revenue opportunity for SMEs thanks to the drive to tackle climate change across the UK.

She says: “We see climate as a key focus area for many of our customers going forward. With the right support, many SMEs will benefit financially from reducing their carbon footprint.

To support this NatWest has pledged £100bn of climate and sustainable funding by 2025 to support the investment the UK needs.”

Steve Wilkinson, manufacturing advisor from the Lancashire Manufacturing Growth Fund, says businesses also need to think about and outline additional added value factors when applying for grant funding support.

That includes their efforts towards carbon reduction as well as regional procurement, equality and diversity and skills.

He adds: “Going down the grant route potentially allows the required support which can be the catalyst to a step-change for the business. I believe that it also ‘forces’ any applicant to reflect and think deeper around what they are doing and why.”

Steve says some grants are currently underused. Lynne Gillen, export manager at the Department for International Trade (DIT), is urging Lancashire businesses to take advantage of a new government fund aimed directly at SMEs with export ambitions.

The DIT’s Internationalisation Fund means SMEs looking to expand into new overseas markets can now apply for up to £9,000 of match funding.

Lynne says: “Lancashire has one of the largest pots of funding.”

It can be used for help with a range of issues, including market research, IP advice, translation services, international social media and SEO work, trade fairs, independent market visits and consultancy.

  • To read this feature in full and access further Lancashire business news, advice and analysis subscribe to Lancashire Business View magazine or join the LBV Hub from just £2.50 per month. Click here to subscribe now.

Enjoyed this? Read more from Ged Henderson

Latest news

1

Three weekly domestic waste collection considered in plans Waste recycling Blackpool

Three weekly domestic waste collection considered in plans

01 Jul 2025

2

Graham Engineering confirms sale to a2e Industries Graham Engineering

Graham Engineering confirms sale to a2e Industries

01 Jul 2025

3

Training 2000 celebrates 'Good' rating by Ofsted Training 2000

Training 2000 celebrates 'Good' rating by Ofsted

01 Jul 2025

4

Fox Group acquires J Fisher and Sons Colin Fisher, Paul Fox CEO and Gary Fisher.

Fox Group acquires J Fisher and Sons

01 Jul 2025

5

Beever and Struthers strengthen leadership team with new partners Dean Curtis and Joe Diston

Beever and Struthers strengthen leadership team with new partners

01 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Chamber Breakfast Networking – July
Chamber Logo1.png.png
LBV Hub Networking
02 Jul 2025 - 02 Jul 2025

Chamber Breakfast Networking – July

St John's Hospice, Slyne Road, Lancaster, LA2 6ST

08:00 - 10:00

The Marketing Metrics that Matter – July 4
LBV Hub Seminars
04 Jul 2025 - 04 Jul 2025

The Marketing Metrics that Matter – July 4

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

08:30 - 11:00

Tri-Site Survey Equipment Showcase
unnamed (2).jpg.jpg
LBV Hub Seminars
09 Jul 2025 - 09 Jul 2025

Tri-Site Survey Equipment Showcase

Crow Wood Hotel, Burnley, BB12 0RT

09:30 - 16:00

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers
Champagne-Jewellery 10 07 25_page-0001.jpg.jpg
LBV Hub Awards
10 Jul 2025 - 10 Jul 2025

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers

Blackburn Cathedral, Blackburn, BB1 5AA

18:00 - 20:30

Choose Chorley for Business - Talent Reimagined Business Breakfast
talentreimaginedbb.png.png
LBV Hub Seminars
10 Jul 2025 - 10 Jul 2025

Choose Chorley for Business - Talent Reimagined Business Breakfast

Strawberry Fields Digital Hub, Chorley, PR71PS

08:00 - 10:30

Shaping Preston's future by remembering its past
1750160034867.png.png
LBV Hub Networking
16 Jul 2025 - 16 Jul 2025

Shaping Preston's future by remembering its past

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin