The growing impact of sustainability for small and medium sized businesses – how we can all thrive in the face of continually rising energy costs

 

Ultimately, it’s a sad fact of life that everyone has to pay the bills. We are buying energy, there is no choice about that, but the traditional cost of that energy, electricity for example, is continually rising.

The UK Government has tried to help by introducing caps on the amounts that electricity companies can charge, but they have already had to allow the caps to rise as the wholesale cost of electricity has risen too much, driven by the international costs of energy and its availability.

So, the big question is, ‘how can we reduce the overall cost of our energy, and stop the continual price rises?’

The key point for business owners to remember when looking at their day to day costs, is that they could actually be looking at investing in renewable energy to reduce their energy bills in the long term. It’s all about making the correct investment decisions to manage the long term sustainability of your business, as well as the environment.

One of the historical barriers to this, however, is the need to find capital to invest in renewable energy in the first place. Today, there are lots of ways to generate that capital – it can be borrowed, come from cash reserves if available, be achieved through various financing arrangements such as power purchase agreements or leases where systems are inherited after a period of time. You could also consider a hybrid of these options to suit your own requirements. This means that the traditional capital barriers are being reduced with the availability of funding options at very low interest rates, making it a lot easier to make the right choices.

Another potential barrier is choosing where to spend your money wisely in the face of many different options available to you. One of the big advantages with renewable energy is its longevity – with a minimum of 10 years (or 25 year production warranties on solar), you would be investing in something that is protected for an extremely long time, not to mention the tax advantages by investing in this equipment.

The pressure to ‘do the right thing’ also supports the need to make longer term investments, not just for businesses today, but also for the future with sustainable buildings and future occupants, even if the current businesses are not around in their current form 20 years from now.

But businesses don’t just need to focus just on the ‘big ticket’ items for renewable energy – if they are not able to make larger investments, they can still demonstrate their green credentials with simple items such as LED lightbulbs, more efficient heating, looking at efficient transportation and vehicle emissions etc. which will have the added benefit of lowering their day to day operating costs.

This puts an interesting perspective on the ‘real-life’ impact of renewable energy, as historically people will have looked at it as a significant capital investment which therefore potentially makes it cost prohibitive, whereas now we are all much more aware of other operational costs within a business – money that is being spent anyway – that could be better deployed to save money, as well as reducing the impact on the environment. Things like utilities, transportation and lighting, which also drive behavioural changes and awareness throughout an entire workforce to support performance improvements.

A 20% cut in energy costs represents the same bottom line benefit as a 5% increase in sales in many businesses.

Source: Carbon Trust

The traditional business model is to focus on driving growth through more sales and turnover, but controlling costs is equally as important for business success, with a major impact on the bottom line.

We’re encouraging business owners to look at the way they do business and manage their business performance in a different way.

Don’t just focus on the usual ‘reduce costs and sell more’ approach, but also think about a 3^rd dimension of creating a sustainable environment for the future whilst identifying new ways to improve your business performance.

Increasingly, responsible businesses are being run using a method called the ‘triple bottom line’ – they are clearly looking at traditional economic accounting, but are also accounting for the environmental impact of their business, whether that is through renewable energy or waste management for example. Many businesses are now actually turning waste via recycling into an income stream, rather than the historical cost of disposal, which is just one example of how doing the right thing can actually ‘win’ economically.

But it doesn’t stop there – there are also social implications as there is statistical evidence that shows people want to work for environmentally responsible companies; it helps with recruitment and retention. There is also evidence to show that businesses in the supply chain want to work with other responsible businesses, sometimes for legislative reasons, but more often its because they want to be associated with reputationally high quality organisations that are focused on ‘doing the right thing’. And finally, more customers will be attracted to responsible businesses and want to do business with them, often prepared to pay a premium to demonstrate their support for sustainable industries.

And the benefits continue as it also helps to enhance your business reputation, both externally and internally, helping to recruit and retain quality staff by demonstrating your Corporate Social Responsibility (CSR) credentials and being seen to be a ‘good business to work with’.

Sustainable initiatives can be good for your business

What we are beginning to see now is that it’s not as hard as you may have thought to contribute and make changes that can reduce your impact on the environment. Making the right decisions can actually be good for your business.

Socially, everyone should be thinking more about the personal impact they are making on the environment, changing behaviour to consider things such as waste management and energy usage.

In fact, the government are now launching new initiatives to support the installation of energy efficient measures in homes across the UK. For example, the Green Homes Grant Scheme will pay homeowners two-thirds of the installation cost up to £5,000 for renewable energy solutions such as heat pumps or solar thermal systems.

Encourage everyone to accept that there are real benefits in understanding environmental issues at all levels, but also start taking actions now to make a difference – it doesn’t have to cost a fortune to be sustainable, we all need to play our part with a hugely increased sense of urgency.