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UK businesses go green – how could this affect the economy?

The UK has one of the biggest climate footprints worldwide, and contributes to, on average, 454.8 million tonnes of greenhouse gas emissions annually.

The business sector alone was responsible for 18.2% of carbon dioxide emissions in 2020. However, last year saw a reduction in both greenhouse gas and carbon dioxide emissions, due to a decrease in the use of transport, driven by the Coronavirus pandemic.

Without reducing the amount of waste produced, the climate crisis will be at the ‘Point of No Return’ by 2035. However, this could be delayed to 2042, if the removal of greenhouse gasses from the atmosphere is strong.

To help slow down the effects of climate change, striving to achieve the goal of creating a zero-carbon society, and reaching net zero emissions by 2050, many UK businesses have decided to do their bit, and go green.

So, what effect does this have on the economy, and by default, the value of the British Pound (GBP) on the foreign exchange (forex) market?

Companies combatting climate change

Some of the companies leading the change globally, and actively working to reduce their energy consumption include:

• McDonald’s
• Dell
• Google
• Tesla

Leading fast-food chain, McDonald’s, uses energy-efficient appliances, cutting their energy wastage by 25%. The company have also set up green parking lots that have permeable concrete, capable of recharging the vehicles and cleaning groundwater. These are reserved only for hybrid vehicles.

McDonald’s also use considerate means to obtain their animal products, as the meat and dairy industry accounts for roughly 14.5% of global greenhouse gas emissions.

In addition, Dell, a popular manufacturer of computer equipment, has promoted the safe disposal of its products, by coming up with an efficient recycling programme.

Google has constructed the world’s most energy efficient data centres. As well as continuously campaigning for energy conservation and the use of renewable energy sources, Google has also funded and supported numerous green energy projects – buying and installing windmills and solar panels.

The effect of ’going green’ on the economy

Going green has many benefits to businesses, and the UK economy. Not only do companies see savings — where they use less water, electric, and packaging — but being climate-cautious has proven to be an innovative market niche, which can help sales, and motivate employees.

On top of this, going green has also stimulated the economy and created a whole new sector, providing hundreds of thousands of jobs. The UK’s low carbon economy is now worth more than £200 billion, which is almost four times more than the manufacturing sector (worth £55.6 billion).

There are more than 75,000 businesses, such as wind turbine manufacturers and recycling plants, that employ more than 1.2 million people. So, not only does the green economy play a vital part in tackling the climate crisis, but it also strives to create more jobs, cleaner transport, reduced air pollution and better insulated homes – providing citizens with an improved quality of life.

Despite action being taken, it’s predicted that the UK will not meet its goals in time to prevent, or delay, the Point of No Return. In order to do so, the Government will need to take serious action, and each individual will need to change most aspects of their way of life – from the way they get to work, to the place they work at.

Because of this, demand for this sector remains high, and its growth is predicted to accelerate in the coming years.

Forex trading

Naturally, the impact of the low-carbon economy also has an effect on the British Pound, which will make investing in the relevant assets popular amongst traders. This leaves us with the question: exactly what is forex trading and how does it work?

Forex is a market for the trading of currencies. The market determines foreign exchange rates for every currency across the globe, and enables investors to buy or sell said currencies. Trading forex is done using currency pairs. For example, the British Pound against the Euro (GBP/EUR). At present, £1 is equivalent to €1.19 .

Although it comes with its risks, forex trading is a great way to gain experience on a large and global market, and with little to no transaction costs, it can be great for beginners.

Traders should take note of the positive effect businesses going green has had, and will continue to have, on the economy. If you’re thinking of investing, then it’s clear that monitoring the climate market, is potentially a good way to make use of your capital, as the UK takes more climate action.

This should be part of a well-established trading strategy that takes into account other factors that affect the UK economy, and buying and selling forex pairs accordingly.

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