Green is the money

Adam Bernstein is a freelance financial journalist

While some decry the concept of climate change, the reality – no matter what is happening – is that there is but one Earth and we have a duty to protect it as best as we can, writes Adam Bernstein. There is, very simply, no Plan B.

Reducing waste

From raw material through to disposal, there’s an environmental impact to what businesses use. Chemicals require care, landfill carries cost, and the harmful effects of plastic are only now being understood.

Reducing waste is one of the quickest and most effective ways to increase profit. But savings can also come from engaging with all employees as waste can be caused by ignorance and inadequate procedures. Most organisations should benefit by decarbonising and making simple changes could reduce a business’s energy costs by 5%-10%.

Changes should not be one-off, but rather, part of a comprehensive plan. A function of this is an environmental policy that is pushed by senior management to underline its importance. At the same time, reduction targets should be set to motivate employees to think about where resources are consumed and how reductions can be made.

Often, though, it’s the simplest of measures that are so effective – sustainability walk-arounds can help identify wasted resources such as lights left on in empty areas; equipment left on standby when not in use; and doors and windows left open during colder weather.

There are a number of technologies that can help such as LED lighting, power quality improvement, energy efficient heating and cooling, as well as renewables like solar PV, ground source heat pumps and combined cooling heat and power. Many of these technologies are low-cost with low to medium payback periods. In contrast, renewable energy technologies like solar PV are considered long-term due to their long payback periods and high initial capital outlay.

Options to change

Another incentive to improve environmental performance in terms of carbon emissions are Climate Change Agreements. These agreements allow sites to claim significant discounts off the Climate Change Levy that appears on their energy bills. In return, a site is required to meet energy efficiency targets for which it is measured every two years.

There is another element of regulation to consider – the relatively recently launched Streamlined Energy and Carbon Reporting. It requires large unquoted companies to prepare and file energy and carbon information in their director’s report in their financial years starting on or after 1st April 2019.

The Carbon Trust points to the government’s Energy Technology List which details energy efficient plant and machinery (manufacturer details along with product references). The trust offers a number of loans, but they are only available to SMEs in certain parts of the UK. SMEs in Wales can apply for an interest-free loan of between £3,000 and £200,000 with the Carbon Trust through the Energy Efficiency Loan Fund where they are replacing existing equipment that will result in energy savings. The same applies to SME’s in Scotland with an interest-free loan, from £1,000 up to £100,000 through Zero Waste Scotland.

The trust also offers information on financing energy efficiency projects. It also has a number of online tools to help firms assess their position – SME Energy Benchmark Tool, SME Carbon Footprint Calculator and a Lighting Business Case Tool.

But there is an alternative, one that’s found in the world of software, where energy technologies are seen as a service rather than as a purchase. Termed EEaaS, instead of purchasing energy saving technologies, firms can implement projects without capital expenditure, finance leasing or risk. A third party invests, and the savings are shared between the customer and the third party.

While EEaaS is suitable for all firms the size and scale of the energy conservation measure will dictate the viability of a project. This is because the process of measuring, quantifying and validating savings can be expensive for small energy saving situations.

Look at the detail

Businesses should check their utility bills and usage. By analysing energy consumption, it’s possible to identify where energy wastage can be minimised and can improve their overall decision making on energy usage. A smart meter is central to this as it provides vital information on what is consuming the most energy. And switching to a green tariff is a simple step that organisations can take to reduce their impact quickly.

On vehicles, firms can make savings through driver training programmes, route planning and switching to electric vehicles. Further, hydrogen might be an option – it’s quick to retrofit and does not cause excessive downtime on the fleet.

Lastly, organisations should identify suppliers that have the largest impact and those with which it has the most influence. The solution may come through tighter tenders and contracts or via new processes and logistics and by emphasising to clients that slower could be greener.

An adjunct to this is to only source materials from suppliers who guarantee a certain level of sustainable operations. And then there’s the elephant in the room, paper recycling.

Summary

It should be very obvious that making a move to environmental friendliness is not only good for the planet, it’s also good for business. With greater environmental consciousness, ignoring the matter could prove commercially fatal.

Content extracted from https://www.boatingbusiness.com/news101/comment/business-matters/green-is-the-money