British bank announces £500 million Green SME Fund

Speaking at the COP26 global climate summit, HSBC, has announced the launch of a £500 million Green SME Fund to help small businesses transition to net-zero.

The launch of the fund is part of a global commitment by the banking group to provide green finance up to $1 trillion over the next five years.

While green financing has previously focused on larger businesses that have greater environmental impact, the Green SME Fund will be available for businesses with a turnover of less than £25 million. Loans starting from £1,000 to help smaller businesses to invest in low-carbon initiatives.

HSBC will join NatWest in targeting smaller businesses looking to reduce their environmental impact, with the bank committing to £100 billion to finance transition to net-zero in October. The COP26 summit has also sparked a move towards more sustainable activities elsewhere in the finance sector, with a number of UK and Scandinavian pension funds pledging greater levels of green investment.

Speaking from COP26, Ian Stuart, CEO HSBC UK said:

“I am delighted to announce to the launch of HSBC UK’s £500m Green SME Fund. Companies of all sizes and sectors have a role to play in the journey to net zero, however the sustainable finance market has been predominately focused on larger corporations. It’s critical that access to funds isn’t a barrier for small and medium sized businesses working to achieve lower carbon emissions.

“We want to help businesses seize the opportunities and growth potential that environmental sustainability offers and the fund, along with our new and expanding suite of tools and resources, will make it easier for small businesses to take practical steps to cut their emissions and help their customers to cut theirs too.”

To further help UK SMEs in the transition to a low-carbon economy, HSBC is also launching a Sustainability Assessment Tool that will offer actionable insights for businesses to reduce emissions.

Research by the bank has found just 23% of businesses are measuring the environmental metrics, despite increasing pressure from customers, government and the media. Furthermore, while a quarter of small businesses believe a sustainability focus will grow their business in the next 12 months, the cost of doing so is a key barrier to change.