Small Businesses Go Green to Boost their Bottom Line

but see tax and red tape as barriers to environmentalism

UK Small businesses want to go greenSmall businesses believe going green can boost their bottom line – but see tax and red tape as major barriers to becoming more environmentally friendly, according to Forum of Private Business research.

Just 10% of business owners responding to the Forum’s latest environmental panel survey have done nothing to reduce steep utilities costs while 41% have streamlined business processes, 28% have reduced energy usage and the same number have embraced more energy efficient equipment.

While 77% of respondents disagree that being green is impossible in the present economic climate 52% argue that green taxes inhibit their ability to invest in reducing energy use and 75% believe that environmental legislation focuses on the needs of larger businesses rather than small firms.

In all, 52% of the small businesses surveyed believe they cannot become more environmentally friendly until they are able to be more profitable.

The Forum’s Chief Executive Phil Orford said: “Small businesses see the benefits of green practices and technologies to the environment and, given rising energy costs, to their bottom lines. They are clearly taking steps towards introducing them but the lack of adequate support from the Government and utilities providers is frustrating.

“We need better information about the choice of support and equipment that is available, and incentives to help business owners embrace environmental processes and trade more sustainably locally, regionally and internationally, rather than ever more taxation. Small businesses should be at the forefront of thinking about the green agenda.”

The impact of industry practices and environmental policies

Just 8% of respondents believe regulators have been effective in protecting them from the ‘bad practice’ of utilities providers, while a significant 87% believe there should be one single government department responsible for utilities regulation and funding schemes.

Further, 38% of panel members have used or recommended to their staff national or local environmental initiatives introduced by the Government, such as the Cycle to Work scheme, while 48% have not – with 63% reporting they have not sought support from government agencies or organisations such as Business Link.

While 33% of respondents believe ‘green’ energy providers are markedly more expensive than traditional suppliers and are therefore not worth considering, 38% disagree with this.

In all, 78% think that using local suppliers is environmentally responsible. However, 76% believe that to effectively manage resources it is necessary to be able to measure energy usage.

While 65% of the small businesses surveyed believe that the cost of energy is more important than maintaining a continuous supply, 43% disagree. In addition, 66% report that introducing measures to guard against extreme weather conditions such as flooding and fire is less important than securing the best returns for their businesses at present, with 31% disagreeing with this.

Controlling costs

A total of 38% of respondents have taken proactive cost control steps by switching utilities suppliers, but few businesses are using environmental consultants with over half of respondents (54%) indicating they do not believe they are appropriate for their businesses.

Other methods of cost reduction being explored by Forum members include tightening up administrative (31%) and travel (35%) processes as well as reducing purchasing procurement costs (45%) – with some businesses benefiting from the Forum’s Buying Support Agency.

While 53% said they receive no support in reducing bills from their energy suppliers, 29% said this depends on the provider concerned. A total of 15% reported that they do receive support.

A total of 73% of respondents focus on ‘common sense solutions’ to reducing waste but 31% only begin to assess how to reduce energy costs when they receive a bill or contract renewal form, while 16% use meters to identify poorly functioning equipment or inefficient processes.

Smart metering and green technologies

While half of all respondents believe there are no barriers to using meters, 64% of those with metering issues identified cost as a major concern.

Others cited poor information and a lack of government leadership as responsible for a lack of confidence in meter suppliers – few firms trust that suppliers or utilities regulators will prevent unit prices from rising following the introduction of smart meters.

Some 20% of respondents believe smart metering is not appropriate for smaller firms, either due to the lack of an economy of scale, difficulties in installation because their property is terraced, listed or rented, or because the type of electricity supply they use renders metering inappropriate.

The inconvenience of changing to meters and even of them inhibiting core business functions were also mentioned as reasons why some respondents are hesitant about installing them.

While 24% of panel members would consider installing energy generating equipment, such as wind turbines or solar panels if there were more loans or grants to help them to do so, 20% said they do not believe it is their decision to make because they rent their premises, the property is listed or they are trying to sell it.

However, some businesses renting properties would be interested in receiving information about how tenants and owners can benefit from such improvements – 11% would like to know more about green technology so that they can maximise their use of it. Just as important for many respondents is accurate information about the costs and pay back terms involved.

In all, poor information (20%) and cost (15%) are seen as the biggest barriers to greater investment in environmental services and technologies.

The Forum is calling on the Government to:

  • Think small first when producing environmental policies affecting businesses: including ensuring policies and regulations are simple, proportional and clear to give business owners the greatest opportunity to understand and, where appropriate, implement government policy.
  • Incentivise the green agenda: rather than simply introducing taxes to persuade business owners that the green agenda is more than a revenue raising exercise with little in return, such as by providing environmental support structures that are more readily accessible to small businesses.
  • Clarify the business case for energy efficient technology and provide better information on the choices available: while small firms see the importance of metering and measuring energy use, there are practical difficulties relating to the installation and operation of meters and green technologies.
  • Support businesses that adopt green measures early: including rewards for large-scale property improvements such as tax relief and soft loans – giving these businesses the confidence to make further investments in low carbon infrastructures. The Green Investment Bank should be able to support micro-generation schemes to improve the nation’s energy security.
  • Support a local agenda: with better support for and promotion of local schemes, closer links between small firms and the communities in which they operate including allowing retailers to use Energy Performance Certification to show off their green credentials and creating a local green agenda to ensure that regenerating high streets is done in a sustainable manner, reducing the barriers put in the way of businesses by planning departments.

is4profit has further business advice articles that may be of interest in our green business section.

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