Investing in a reusable carrier bag helps stop unnecessary pollution – and saves you at least 10p at the supermarket. Likewise, formulating a green strategy for your business today can provide a wealth of savings and opportunities further down the line. However, recent research shows that although 91% of SME owners in the UK believe it’s important to be sustainable, 42% struggle because of a lack of guidance.
The rise in the cost of living and in doing business isn’t predicted to return to normal levels until 2024, putting additional pressure on company bottom lines over the next few years. Those with a green strategy in place will help future-proof their businesses. Why? Because a green strategy opens new pathways for growth that are both better for the environment and have the longevity to outlast troubled times.
Green thinking places emphasis on business growth that is sustainable, with a low impact on the environment. Starting with a financial and waste audit simultaneously is a good way to identify correlations between inputs and outputs that could save resources. For those thinking long-term: here are some other ways that greening your business can result in growth …
Green tax breaks
In 2019, the UK government outlined its plan to decarbonise all sectors of the UK economy by 2050. The good news? Businesses that actively help the government achieve this net zero strategy can benefit from tax breaks that can insulate them from economic shocks.
These tax breaks are designed to encourage environmentally friendly practices for businesses of all types and sizes – from those that use a lot of energy, such as manufacturing and industrial services, to small companies that use only small amounts of power, and those that buy energy-efficient technology. A Climate Change Levy, CRC Energy Efficiency Scheme and Capital allowances are just some of the environmental tax reliefs and schemes available.
Smart business owners will understand the value in making environmental issues a priority, and build these tax breaks into their plans. Incorporating the financial gains from sustainability commitments into a green business strategy demonstrates the return on investment (ROI) to stakeholders.
Having a green strategy for your business is attractive to investors looking for future-proofed and long-term ROIs. According to global tech consultancy Gartner, 85% of investors said they consider environmental, social and governance (ESG) factors as influential in their assessments. As a result, organisations with poor corporate sustainability disclosures are more likely to be seen as risky investments.
Investments in ESG businesses are predicted to reach up to $53tn and may make up a third of global assets under management by 2025. European and US government pledges to fund a post-pandemic recovery have further boosted the popularity of these assets. Investors want to see more than one type of value from their contributions, and ESG is one way policymaking and profit can be combined to pave the road to net zero.
Green investments can help meet climate agreements and fill gaps in sustainability funding. While there may be hurdles with classifications of “greenness”, the green economy, as defined by the FTSE Russell model, represents more than 5% of the total listed global equity and is the fastest-growing equity market. The government’s Green finance strategy aims to provide financial literacy and foster green and sustainable investing UK-wide.
Gaining and retaining employees
The Green finance strategy is also bringing more attention to green jobs, including a Green Jobs Taskforce as part of the government’s The 10-point plan for a green industrial revolution. The taskforce’s report on the development of jobs with links to green skills outlines how free courses, apprenticeships and skills bootcamps will support the government’s plan for net zero.
Achieving sustainability goals can also attract and retain top talent. Seven out of 10 employees said they would apply for or stay with an employer that they consider sustainable, with just under 50% also willing to take a pay cut to work for such a company. A concern for ecological and social responsibility indicates an appetite for ethical business practices from the 75% of UK adults worried about the impact of climate change.
Combined environmental and health benefits have seen cycle-to-work schemes become immensely popular. More people than ever saddled up during lockdown and 51% of employees say they want to cycle to work. Considering ecological effects when offering professional development and personal wellness opportunities empowers employees to make moves to combat climate change. It also helps build a positive and productive workplace culture that keeps you competitive in the talent market.
Appealing to consumers
In 2022, brands need to have a strong voice if they want to be heard. With more than a third of consumers saying they are willing to pay a premium for sustainable products and services, businesses are wise to centre their green strategies as part of their brand marketing.
Having a clear sustainability mission on your website is a simple way for a small business to make a big statement. Consumers are keen to shop with brands that align with their values, and 45% say they look for a good environmental reputation as their primary identifier when choosing where to shop. Similarly, sustainability concerns from generation Z – the fastest-growing consumer group – are also ramping up pressure for greener business practices. More than two-thirds of gen Zers reported being willing to pay more for an environmentally friendly food and drink product.
While it’s essential to avoid greenwashing, making even small changes to product packaging or company culture can build momentum and foster a motivated and educational place for customers to connect with your brand.
Being aware of the financial investments and gains to be made from a green strategy can help you identify where to reduce costs and save resources. A green business strategy increases profit margins in budgets, enabling pathways for reinvestment and growth, helping meet government targets and keeping customers and stakeholders happy.
If you’d like help to green – and grow – your business, the British Business Bank should be your first port of call. Dedicated to making finance markets work better for smaller businesses, it provides free financial tools and expert information to get you moving in the right direction. Find out more at british-business-bank.co.uk/finance-hub/sustainability