March 30, 2021 | Stamford, CT — Half of small businesses and midsize companies in the U.S. see environmental, social and governance (ESG) issues as important to the long-term growth of their business and report it has an impact on bank selection decisions.
A solid majority of the business owners and executives participating in the latest Greenwich Market Pulse Study see ESG as important to their business now and expect ESG issues to become even more important over the next five years. As these companies recognize the potential impact of ESG on their operations and business results, they are beginning to examine the ESG policies of critical partners like commercial banks.
“In 2020, the COVID-19 crisis overshadowed virtually all other topics for small businesses and midsize companies, many of whom were struggling just to keep the lights on,” says Chris McDonnell, Head of Digital Benchmarking at Greenwich Associates. “But as the crisis recedes, banks should be prepared for increasingly detailed discussions about ESG policy from even their smaller commercial banking clients.”
Currently, about half of business owners and executives we interviewed are satisfied with their lead banks’ commitment to ESG, with several study participants even praising their banks for being “diligent” and “forward thinking” about ESG topics. However, participants also cite a continuing decrease in paper consumption, waste recycling and energy savings as specific areas banks could further demonstrate their commitment.
One in Five Businesses Plan to Switch Banks for PPP Round 2
Overall, business owners and executives were divided over their banks’ handling of the first round of PPP loans. One in four midsize businesses and 30% of small businesses say their banks were less helpful in navigating the PPP forgiveness process in 2020. As a result, one in five plan to apply for a PPP Round 2 loan through a competitor to their current bank.
“For businesses that perceived their bank as falling short during the PPP process last year, the consequences could be dire,” says Dana Schwaeber, Relationship Director at Greenwich Associates.