Financial support

for reducing emissions

To help you to capture the opportunities that decarbonisation can create, this section of the SME Climate Hub is designed to help you find the most appropriate financial support for your business’ journey to net zero.

Financial support is becoming available on improved terms for businesses reducing their emissions – called here ‘discounted lending’ or ‘financial support on preferential terms’.

Climate finance for your business may be available from:

Customers (buyers)

Banks

Grants and other forms of government support

Balance sheet and investors

By clicking on any of the above sources of funding, you will be taken to information on:

Why funding from this source may be available, including an example
Who to speak with about this source of funding
How to prepare for conversations
What to ask, including a sample conversation

You will find eight stories of businesses that have found financial support and are taking action to decarbonise

Success Stories

Eight stories of businesses that have found financial support and are taking action to decarbonise

TACOFINO and VANCITY

Advisory services and loan

Tacofino, a restaurant based in British Columbia, Canada, was looking to reduce its emissions when opening a second restaurant in Vancouver. Through Vancity, Canada’s largest credit union and a sustainable finance leader, Tacofino secured a $350,000 loan from the credit union’s Canada Small Business Financing Loan.

DAVID LUKE and HSBC

Green loan

In early 2021, David Luke, a UK-based school uniform provider, installed a 1,000-panel solar PV system with the help of an HSBC Green Loan. The six-figure loan came from the bank’s sustainable finance initiative dedicated to support sustainability projects in SMEs and mid-market companies.

TESCO and SANTANDER

Sustainability-linked supply chain finance

In an effort to address the GHG emissions throughout its value chain, Tesco launched a sustainable supply chain initiative to encourage and support its suppliers by providing financing linked to sustainability performance. The initiative builds on The Tesco Supplier Network, which supports over 10,000 suppliers from different sectors to share best practices.

GUCCI and INTESA SANPAOLO

Green loans for suppliers

Annually, Gucci publishes the total environmental footprint of their suppliers. In response to challenges experienced by their supply chain partners in accessing funds to advance sustainability in their own operations, Gucci has partnered with the Italian bank, Intesa Sanpaolo to enhance SMEs’ access loans at favourable terms and conditions if the supplier improves the sustainability of its operations.

McCORMICK, CITI AND INTERNATIONAL FINANCE CORPORATION

Sustainability-linked supply chain finance

In August 2021, American multinational food company McCormick & Company announced a partnership with the International Finance Corporation (IFC) and Citi to provide its suppliers with financial incentives linked to sustainability improvements. The initiative offers discounted rates on short-term working capital to suppliers that meet McCormick’s sustainability standards. These standards cover issues such as labour conditions, environmental impact, crop management and women’s empowerment.

BESTCOAT and OVERSEA-CHINESE BANKING CORPORATION (OCBC)

Green loan

Bestcoat was able to secure a green loan by leveraging the  OCBC SME Sustainable Finance Framework. By utilising a green loan, Bestcoat was able not only to secure the required financing, but also assure its customers of its green credentials. Green loans provide financing for ‘green’ projects, such as renewable energy, green buildings, pollution control, the circular economy and similar.

GROUP V and BNP PARIBAS

Green loan

Group V set its sights on achieving major GHG reductions – the majority of which are concentrated in its fleet – by converting to zero direct emissions vehicles. Shortly before this, BNP Paribas adapted its banking products and services to the priorities of the EU Taxonomy, which encourages investment in sustainable activities. Consequently, Group V was able to secure a preferential instrument (green loan) with more favourable terms through BNP Paribas by aligning its objectives with those of the EU Taxonomy in its application.

BAR ONE CLOTHING / ZERO WASTE SCOTLAND

Green grants and loans

Bar One secured an interest-free SME loan through the Zero Waste Scotland programme, enabling the business to implement several energy and carbon reduction measures within its operations, including the installation of energy-efficient LED lighting and a low-voltage distribution board. Together the recommendations would cost £13,500 to implement and would save the business £1,900 a year on their energy bills, while reducing GHG emissions by an estimated 9.5 tons.

How to choose which financial support is best for you

Understanding which avenue of financial support is best for you will depend on the specifics of your business, geography and, importantly, what you are looking to invest in.

Be sure to visit the SME Climate Hub’s short course, which includes advice on how best to rank available financial opportunities.

To ensure that financial support for SME decarbonisation continues to improve, over the next year the SME Climate Hub will work with banks and buyers to explore what new forms of finance they might be able to offer. If you would like to be involved with this research and development you can

Potential sources of financial support – summary table

Stakeholder

Motivation for providing financial support

Examples of what financial support might be available

Examples of who you could speak with to learn if support offered

Customers (buyers)

Climate commitments by companies that include reducing the emissions of their supply chain
Improve the resilience of their supply chain to new policies aimed to avert climate change or the negative impacts of climate change
Protect supply chain from increased costs associated with carbon, such as ‘dirty’ energy

Improved purchasing terms (eg, days receivable reduced so working capital improves for small business)
Access to preferential invoice finance (eg, borrow against outstanding purchase orders to access funds sooner)
Advice and mentoring

Procurement representative

Banks

Commitments by banks to support customers to reduce emissions
Reduce the risk and carbon footprint of bank lending
Strengthen relationships and generate business opportunitie

Working capital solutions, e.g. trade finance
Loans for investments that reduce emissions
Emission calculators and advice

Relationship manager
Sector specialist (eg, transport)

Grants and other forms of government support

Local, national and international objectives for action on climate change

Grants to encourage investment in emissions reduction
Discounted lending distributed by a development bank, such as KfW
Access to investors or other sources of funds dedicated to climate action

Accountant
Local council enterprise officer
Local municipality
Bank
NGOs offering financial support in your area

Balance sheet and investors

Lower operational expenditures
Improve the commercial positioning of the business (eg, including alignment with buyers’ climate-related procurement policies)
Investors’ climate objectives

Self-funded from balance sheet (cash, asset sales, etc.)
New shareholder investment (equity)

Accountant
Current shareholders
Prospective investors

Customers (buyers)

Motivation for providing financial support

Climate commitments by companies that include reducing the emissions of their supply chain
Improve the resilience of their supply chain to new policies aimed to avert climate change or the negative impacts of climate change
Protect supply chain from increased costs associated with carbon, such as ‘dirty’ energy

Examples of what financial support might be available

Improved purchasing terms (eg, days receivable reduced so working capital improves for small business)
Access to preferential invoice finance (eg, borrow against outstanding purchase orders to access funds sooner)
Advice and mentoring

Examples of who you could speak with to learn if support offered

Procurement representative

Banks

Motivation for providing financial support

Commitments by banks to support customers to reduce emissions
Reduce the risk and carbon footprint of bank lending
Strengthen relationships and generate business opportunitie

Examples of what financial support might be available

Working capital solutions, e.g. trade finance
Loans for investments that reduce emissions
Emission calculators and advice

Examples of who you could speak with to learn if support offered

Relationship manager
Sector specialist (eg, transport)

Grants and other government support

Motivation for providing financial support

Local, national and international objectives for action on climate change

Examples of what financial support might be available

Grants to encourage investment in emissions reduction
Discounted lending distributed by a development bank, such as KfW
Access to investors or other sources of funds dedicated to climate action

Examples of who you could speak with to learn if support offered

Accountant
Local council enterprise officer
Local municipality
Bank
NGOs offering financial support in your area

Balance sheet and existing or prospective investors

Motivation for providing financial support

Lower operational expenditures
Improve the commercial positioning of the business (eg, including alignment with buyers’ climate-related procurement policies)
Investors’ climate objectives

Examples of what financial support might be available

Self-funded from balance sheet (cash, asset sales, etc.)
New shareholder investment (equity)

Examples of who you could speak with to learn if support offered

Accountant
Current shareholders
Prospective investors