Five business benefits of becoming more sustainable
Chris Hird, Corporate Finance Associate Partner at Haines Watts, discusses the key benefits of becoming more sustainable as a business.
The shift to more environmentally conscious and sustainable business has skyrocketed over the past few years, and it’s not hard to understand why. The benefits of ‘going green’ are far reaching and they make good business sense.
Beyond playing your part to reduce CO2 emissions and meet the government’s net-zero target, there are long-term savings and significant tax benefits on offer to those who choose to become more eco-friendly.
Over the next few years, businesses will have an important role to play given the commercial sector contributes nearly one fifth of CO2 emissions in the UK. Businesses of all shapes and sizes must take a leading role in relation to everything from energy, waste, transport and supply chains.
With consumers increasingly focusing on the environmental practices of businesses, those who fail to embrace it risk falling behind and losing their competitive edge. If you haven’t done so already, now is the time to start considering what you can do. To help you on your journey, we’ve outlined some of the key business benefits of becoming more environmentally conscious.
Lowering your overheads
Whether it’s your heating systems, insulation or lighting, taking the time to look at your energy costs can significantly lower your costs as well as your carbon footprint.
Some energy providers and organisations (such as BEST, if your business is based in the North East) provide free energy audits. By identifying ways in which your business can save energy in your day-to-day operations, these audits are a great starting point to understand how you can cut down your energy costs whilst also becoming more sustainable as a business.
Tax incentives and reliefs
When you’ve reviewed your business’s energy audit, you might start to consider whether you need to invest in new machinery and systems to help your business become more energy efficient.
This is where Capital Allowances provide an invaluable opportunity for your business, by offering significant tax relief on qualifying costs including solar panels, energy-efficient lighting and AC systems, and in some cases even electric company vehicles and their charging points. The relief stretches up to 100%, and certain assets may qualify for the newly introduced Capital Allowance Super Deduction which creates tax savings of 25p for every £1 spent.
Meanwhile, if you’re looking at innovative ways of improving or creating new processes and products to become more eco-friendly, Research and Development Tax Relief could also provide another cash boost. With the average SME claim coming in at over £50k, the relief can help to bring new ideas to life.
Climate change levy exemptions and reductions
The Climate Change Levy is charged on the amount of energy your business uses if you operate in public services or the commercial, industrial or agriculture sectors. Unless you own a generating station, or operate a combined heat and power station, you’re likely to pay main rates which are charged on electricity, gas and solid fuels.
Your business will be exempt from the levy if: you use a lot of energy because of the field of work you’re in; you don’t use a lot of energy in your business or if you buy energy-efficient technology.
You can also reduce your CCL liability by entering into a voluntary climate change agreement with the environment agency. This involves measuring and reporting your energy usage and carbon emissions against pre-agreed targets, and in return, your business would receive a 90% reduction on the CCL rate you pay on electricity and a 65% reduction on gas and other fuels – a win-win situation, as you’re helping the environment and lowering your liabilities at the same time.
Access to grants and funding
If your business doesn’t qualify for tax reliefs, there are a number of funding opportunities and support packages on offer, to help give businesses a head start in the race to net zero.
Applications and competitions for funding are constantly opening and closing, so it’s worth researching and regularly checking on your all of your available options through your local authorities and on the government’s website.
But for now, some of the main opportunities include:
Net Zero Innovation Portfolio: This £1bn fund was announced as part of the government’s 10 point plan for a green industrial revolution. It will fund low carbon technologies and systems, whilst also decreasing the costs of decarbonisation in specific industries. Competitions for funding have already launched, and will continue to launch throughout the year - all of which can be accessed here
One Carbon World grant funding: SMEs can apply for a 50% grant up to the value of £1500 for lowering their carbon footprint. Round 8 of the One Carbon World Carbon Footprint Grant Fund will open later in the year, but you can apply for the grant now, through their online application form.
Technology Developer Accelerator Programme: If your SME has technology or a product which could potentially lower the environmental impact of transport, you could be eligible for grant funding, support and mentoring worth up to £135,000. All of the details on eligibility and applying are available here.
Becoming a more socially responsible business
Recent stats show that over three quarters of millennials consider a business’s environmental commitments before deciding where to work, and one in three consumers have stopped purchasing from businesses because they weren’t eco-conscious.
Taking a proactive approach to your environmental policies and practices, and leading the way for your suppliers and clients alike can have a hugely positive impact on your brand image and reputation – both of which will go a long way when it comes to turnover.
In order to truly make a positive impact on the environment and your business, any changes need to be implemented across your entire company and engrained in the way you work rather than being checklist driven.
Supporting you with your bid to become more sustainable
Whether it’s helping you to access grants and funding, or assessing whether you qualify for tax relief, our team are here to sit alongside you every step of the way, in your bid to become more environmentally conscious.
This was posted in Bdaily's Members' News section by Haines Watts .
Enjoy the read? Get Bdaily delivered.
Sign up to receive our popular North East morning email for free.