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Research from Aldermore’s Green SME Index has revealed that 489,000 UK small and medium-sized businesses (SMEs) qualify as green, meaning they have put formal measurements and commitments in place which will see them transition to sustainability by the government’s net zero 2050 deadlines. 

This number has more than doubled in the last year; only 220,000 (4%) were green at the start of 2023. 

Overall, two million (42%) SMEs have started on the road to making their business fit for net zero. However, these numbers have remained relatively static in 2023 indicating that while some businesses are moving ahead in their transition, the majority (58%) are not making plans to go green.  

Over a quarter of SMEs have ‘green intentions’ and are currently assessing their sustainability goals (26%). Meanwhile, one in 14 SMEs (7%) could be described as ‘greening’, being further along in the journey towards this transition. On average, SME leaders spend around 16 hours a year considering their approach to sustainability. 

With a cost-of-living crisis showing no signs of abating and ongoing turmoil in global politics causing continued pressures, the economic outlook for the UK at the start of 2023 was gloomy at best. 

Yet, despite the unfavourable predictions of economic commentators in the press, asset finance volumes in 2023 got off to a solid start and, according to figures from the Acquis Index, the value of new lease originations in the first quarter of the year was ahead of the same period in both 2021 and 2022; with a 45% increase on 2021 and a 4.4% increase on 2022.  

However, this strong start to the year was followed by a tricky second quarter, with April and May experiencing an unseasonable dip in total lease values. May in particular saw a 13% decrease in the total value of new leases against the same period the previous year.  

More than eight in 10 small businesses (85%) plan to invest in sustainability measures in the coming year, with energy efficiency ranking as the top priority for 2024 – according to new research from Novuna Business Finance. The survey asked a representative sample of 1,000 small business leaders which investments they were thinking of making in the next year to help improve their sustainability credentials.  

The findings include. Energy efficiency: One-third of businesses (33%) said they plan to invest in solar or renewable energy, with an additional 26% focusing on improving the insulation of their premises – and 24% plan to overhaul their heating systems for increased efficiency. Electric vehicles: A notable 28% of survey respondents are considering the switch to EVs and 25% are keen to install electric charging points at their premises. Leadership for sustainability: A significant 22% of businesses have plans to appoint a Head of Sustainability, as part of a drive forward improvements at a strategic level. 

In a move set to heighten regulatory and economic barriers for financial leasing companies, China’s National Administration of Financial Regulation (NAFR), the nation’s centralised financial regulator, has proposed more stringent rules for the sector. 

Fitch Ratings anticipates these measures will expedite the exit of weaker and smaller firms while driving further consolidation within the industry. The consultation paper, published on January 5, outlines key revisions to the regulatory framework governing financial leasing companies, introducing measures aimed at enhancing capital, leverage, and liquidity management. 

Fitch Ratings notes that the proposed rules, if effectively implemented, could strengthen the standalone credit profiles of larger financial leasing entities, positively impacting the sector’s long-term development. One of the significant changes involves the imposition of a leverage cap, restricting the total assets to equity ratio to 10x. Additionally, Tier 1 capital is mandated to cover at least 6% of adjusted on- and off-balance-sheet assets. 

The tightening of shareholder requirements signals a regulatory shift towards greater commitment and responsibility from major shareholders. 

In a recently released report, Fitch Ratings outlines that Europe’s largest banks are poised to enter 2024 on a solid foundation, demonstrating resilience in the face of a subdued economic outlook. 

The report reflects on the continued robust performance throughout 2023, propelled by higher interest rates contributing to increased net interest margins (NIM). However, the analysis suggests potential challenges, including higher funding costs and a modest impact on asset quality, leading to a slight dip in profitability. 

Throughout the third quarter of 2023, most of the 20 large banks featured in Fitch’s quarterly credit tracker exhibited notable strength. The growth in net interest income and minimal loan impairment charges (LICs) resulted in impressive operating profits. The median annualised operating profit/risk-weighted assets ratio saw a significant rise to 3.2%, compared to 2.1% in 2022. 

While French banks faced challenges due to liabilities repricing faster than assets, Fitch anticipates their performance aligning with other banks in 2024 as loan books gradually reprice.