Why manufacturers should embrace sustainability and see Net Zero as an opportunity

Posted on 14 Jun 2022 by James Devonshire

Sustainability and Net Zero are two of the biggest buzzwords in industry right now. But what kind of gains are manufacturers – particularly SMEs – making in these two areas? The Manufacturer's James Devonshire sat down with Dave Atkinson, UK Head of Manufacturing, SME & Mid Corporates at Lloyds Bank, to find out more about the initiatives being employed and why businesses should see the green agenda as an opportunity.

Manufacturers have an appetite for sustainability

Dave began by telling us that Net Zero is firmly on UK manufacturers’ minds, a view that is supported by Lloyds’ own research. “According to our Lloyds Bank Business Barometer – which has just celebrated its 20th anniversary – around a third of all manufacturing businesses are hoping to reach Net Zero within the next 20 years,” said Dave. “Indicating just how important they deem it,” he added. Dave then referenced some separate Lloyds research, its UK Manufacturing: From Now to Net Zero report, which reveals how SMEs are recognising the commercial benefits of striving to be more sustainable.

“Just over one-third believe that committing to working towards Net Zero will bring value to the actual brand,” Dave said. And these benefits don’t just extend to the marketplace, but to employees and talent as well.

“We’re starting to find more manufacturers are saying to us that they interview someone for an apprenticeship or a role, and actually the interview is being turned around, with the candidate starting to question them and interview them about their sustainability and carbon credentials,” Dave said.

Dave added that by having a plan and highlighting how they are working towards being more sustainable, manufacturers not only add value to their brands but also promote themselves as more credible employers.

Engineer,Teaching,Apprentices,To,Use,Computerized,Lathe. Credit: Shutterstock

Manufacturers are now being quizzed by potential apprentices in interviews about their sustainability and carbon credentials. Stock image courtesy of Shutterstock

Five steps on the way to success

Dave then went on to talk about the current manufacturing landscape and how, despite the challenges they face, firms are still pushing on with sustainability initiatives regardless. The key, Dave said, is to just start somewhere.

“For those businesses that have multiple tensions and concerns to contend with at the moment – significant supply chain disruption, inflationary pressures, geopolitical tensions, energy price hikes and so on – it can be a challenge to get sustainability on the boardroom agenda,” Dave said. Nevertheless, many are.

Dave said there are some clear, common steps many businesses are taking to get the ball rolling.

“It almost doesn’t matter where you start. It could just be educating yourself about what everything means, or getting to terms with the difference between scope one, scope two and scope three emissions and the associated complexities,” Dave said. “Invest in solar panels, convert your vehicles or your fleets to electric wherever possible,” he added. The Manufacturer recently reported on how one Lloyds’ manufacturing client has made some great green progress. Bri-Stor Group, whose customers include the AA, RAC and JCB, has installed almost 2,000 solar panels at its 33-acre site in Hixon using a £350k loan provided through Lloyds Bank’s Clean Growth Financing Initiative.

Dave said that once firms have made some kind of start, they can then start measuring and monitoring, to see the impact they’re making and analyse their progression towards Net Zero.

“Some companies, as part of their scope two improvements, might look to switch energy providers. This can not only lead to cost savings for them, it also helps improve their green credentials,” Dave said. In fact, the aforementioned Lloyds Net Zero report reveals that 41% of manufacturers have already moved to a renewable energy supplier.

The Lloyds Net Zero report includes a practical five-step guide for SME manufacturers. It is designed to help businesses move from being aware of the challenge and opportunity of Net Zero, to developing a strategy and taking action.

sustainability image courtesy of Shutterstock

Bri-Stor Group has installed almost 2,000 solar panels at its 33-acre site in Hixon. Stock image courtesy of Shutterstock

Accelerating the journey to Net Zero

We concluded our interview with Dave by asking how the Net Zero journey can be accelerated, be it with additional government support and/or financial incentives.

“We should be really proud of our manufacturing sector with the challenges it has faced. We’ve said for years and years what a resilient and agile sector industry is and it’s proving it yet again,” Dave said.

He added that it’s admirable how businesses are not just focusing on surviving and getting back to some semblance of normality, but also looking at green initiatives at the same time – many of which will make a difference to their longevity and opportunities.

Referring back to Lloyds Net Zero report, Dave explained how 34% of businesses have sought advice from their professional trade bodies. As the Lloyds’ report states: ‘Trade bodies have an important role to play in supporting the building of networks, creating introductions and supporting a collaborative environment within the sector.’

Meanwhile, almost one in three (28%) have had conversations with their financial provider, a reality that Lloyds has taken steps to support.

Dave explained how the bank has put its relationship managers and relationship directors through a partnership with the Cambridge Institute for Sustainability Leadership (CISL). “We’re helping them understand the challenges the industry faces, so they can have better conversations to help guide and steer clients towards the help and support that is available,” Dave said.

In terms of government support, the Lloyds Net Zero report also reveals how SME manufacturers have actually constructed a want list. This includes, to name but a few:

  • Introduce a compulsory sustainability accreditation scheme which makes a business’s sustainability credentials clear and comparable with other businesses
  • Establish central advice hubs and ‘one stop green ambassadors’ that understand the sector and can provide advice and plans that are relevant for SME manufacturers
  • Set up ‘one stop shops’ with information on all grants, incentives and capital allowances, making finding the right information easy for SME manufacturers
  • Create tools to make it easy for SME manufacturers to measure their carbon footprint

Lloyds has actually developed a tool to help businesses calculate the savings and improvements that certain levels of green spend and investment can make. You can try the Lloyds’ Digital Green Buildings tool here: www.lloydsbank.com/business/sustainability/green-buildings-tool.html

For further valuable insights, download the full Lloyds UK Manufacturing: From Now to Net Zero report.

About Dave Atkinson

Dave Atkinson, Head of Manufacturing at Lloyds BankDave Atkinson is Head of Manufacturing at Lloyds Bank, a role he has held for more than eight years. He is also regional director for the Midlands at Lloyds Bank, working with SMEs and Mid-corporates in the UK’s manufacturing heartlands.

He recently authored the UK Manufacturing: From Now to Net Zero report, outlining the steps firms can take to transition to net zero emissions.