Due to changing public opinion and changes in government legislation running your business in a sustainable way is no longer a matter of preference. More and more customers want the brands they choose to engage with to be eco-friendly. Acting sustainably is becoming a defining factor in a company’s commercial viability.
In order to work in line with the government’s pledge to bring all greenhouse gas emissions to net zero by 2050 it is important to be aware of the impact your business has at every stage of the supply chain.
According to HSBC’s Made for the Future report almost half of UK companies are planning to increase their environment-related spending between now and the summer 2021.
Out of the 2,500 organisations that were surveyed, 69% intend to focus their budgets on making manufacturing more sustainable, 66% will be improving internal practices and 63% will be updating buildings and equipment.
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Barclays recently revealed that 75% of UK businesses are benefiting commercially after going green. It is becoming evident that investing in green, sustainable measures is not just an ethical decision but also a profitable one. Although implementing green infrastructure can be costly the costs can be more than offset by the economic benefits.
One third of businesses surveyed by Barclays reported lower businesses costs as a result of their green investments. 27% of businesses believed that their actions would help their company gain “environmentally responsible” status in the marketplace.
Investing in green and sustainable measures not only enhances your brand image but increases your competitive advantage.
Consumer research by The Natural Marketing Institute, a strategic consulting partner that operates in 30 countries has found that Consumers are 58% more likely to buy a company’s products or services when they know the organisation pays attention to its impact on society and the environment. Their research showed that consumers will spend up to 20% more on environmentally sound products and services.
Shannon Diett, VP marketing at DHL Express UK, comments:
“Sustainability is becoming a fundamental element of commercial success and many start-ups are building their businesses around this principle. Equally, consumers are becoming more conscious about their decisions and the impact they’re having.
As well as making major lifestyle changes, people also want to be able to make simple contributions, whether that’s switching to a green energy provider, making a charitable donation at the point of checkout or opting for an environmentally friendly delivery option.
In 2006 we led the way in reducing the impact of logistics by launching our GoGreen Carbon Neutral service, which helps combat climate change by offsetting emissions from the transportation of shipments. Since then, we have seen a growing demand for GoGreen products and services from companies of all sizes. As more businesses recognise the need to reduce their own environmental impact, they can offer customers the option to choose a green delivery solution as a point of competitive advantage.
A GoGreen shipment is just like any other sent via DHL but includes a corresponding contribution to a climate protection project through the purchase of carbon credits. These go to support projects such as wind farms or biomass power plants.
Sustainable growth is the aim of any good small business so it’s vital that they have access to services which support them in achieving this goal. DHL Express can provide carbon reporting that allows businesses to analyse their environmental footprint and confidently design a carbon reduction strategy.”
There is no doubt that improving a company’s reputation by showing dedication to sustainability can have an indirect effect on its net profits.
One of the weakest links when it comes to carbon emissions at the moment is the transportation sector. Figures from the Department for Business, Energy and Industrial Strategy found that in 2018 transport accounted for 33% of all CO2 emissions in the UK most of which came from road transport.
Of course, while it’s not possible to bring a global economy reliant on the transportation of goods and people to a halt, there is much that can be done to make it more environmentally friendly.
It is likely that 2020 will see a surge in more sustainable transport options. Online shopping is booming, annual sales increasing from £33bn in 2012 to £76bn in 2019. This means a lot of orders to fill and a lot of vehicles on the road emitting carbon dioxide into the atmosphere.
Another more global survey conducted by J. Walter Thompson Intelligence found that 83% of adults in the UK, US, Australia and China would always pick a brand with a better record of sustainability. 70% of consumers would be willing to pay more for environmentally friendly services.
Many of the world’s biggest brands have committed to a sustainability overhaul. Delivery service UPS launched a fleet of lightweight electric vehicles with zero tailpipe emissions. Unilever alleges that its portfolio of 26 sustainable brands, including Dove, Lipton, Knorr and Vaseline grew 46% faster than the rest of its business in 2019.
Royal Mail are also doing their bit by adding an additional 190 electric vans to its fleet of 100 in a bid to reduce emissions. In March last year they announced a six-month trial of eight ‘e-trikers’, which are basically just delivery tricycles.
There are even some bold start-ups which have launched with exclusively green fleets.
One example is a company called Green Courier which claims its fleet of low-emission bikes, electric vans, motorcycles and cars is one of the most environmentally friendly in the UK.
There’s also the London-based Ecofleet, a delivery service that uses a fleet of carbon-neutral electric vehicles to deliver consignments from its warehouse to you or your clients. As well as sustainable vehicles, Ecofleet’s optimisation software determines the fastest and most efficient delivery route.
Currently many businesses are missing the chance to make a 58% saving in carbon emissions by not consolidating their deliveries. There is definitely an opportunity here for many businesses to develop software to help with the logistics of consolidation.
Though there are many benefits to developing a sustainability strategy, businesses shouldn’t expect doing the right thing to come for free. Innocent drinks, a B Corp company committed to balancing purpose and profit is seeing more demand than ever for products which have an impact beyond just the price.
Katie Leggett, sustainability manager at innocent drinks, says:
“It’s the truth that we’re often charged more to purchase products that have embedded purpose. The benefit to the business may not be short term but may instead be for the planet, and the knock-on impact associated with that. For example, less extreme weather means more predictable harvests and therefore more consistent supply across the global agricultural system.
We vote for the world we live in with the products we buy, and people are starting to vote for products that consider the environment and society as they’re being made.”
Gemmer Crozier, sustainable development coordinator at Brother UK, comments that environmental, social and governance capabilities have all become key points for review in business purchase decision-making.
“In my role, I’m helping to support IT resellers complete tenders where responsible business practices make up as much as 40pc of scores. The public sector, thanks to enlightened legislation, is helping to drive this.”
Many companies have found that they are operating more efficiently after implementing more sustainable business practices. Better conservation and use of resources has often resulted in a more streamlined operation and decreased costs.
Reducing waste and using resources more efficiently can save businesses money. A simple example would be unplugging devices when not in use.
Businesses can also benefit if
they qualify for government grants and tax breaks, an example would be reducing
your climate Change levy. The Climate Change Levy (CCL) is an energy
tax that applies to non-domestic consumers in the United Kingdom along with value-added
tax (VAT). The Climate Change Levy is chargeable on both electricity and gas
CCL is chargeable on units/ kWh used and was introduced to increase energy
efficiency of energy used for business or non-domestic purposes and reduce carbon
Financial and investment analysts see sustainability plans for energy efficiency and reduction of environmental impact as an important company evaluator criterion.
A study by Goldman Sachs showed that companies in six industries considered leaders in environmental, social and governance policies to have outperformed the general stock.
Another study based on CFO research that surveyed 175 top finance executives revealed that more than half believe their companies will increase revenue through strong sustainability initiatives.
The Top 10 Business Risks for Business, a report published by Ernst & Young highlights the importance of businesses being prepared for tighter environmental regulations and increased energy costs. It is likely that companies will be legally required to reduce carbon emissions by anything between 50 and 80% by 2050. This will affect both the availability and cost of energy, which are expected to double within the next decade.
Another factor that businesses need to consider is that employees increasingly want to work for companies who are ‘doing the right thing’. 52% of employed adults feel that their companies should be more environmentally aware according to Adecco, an international HR company.
Creating a healthier work environment for employees as well as choosing more sustainable products is not only environmentally friendly but people friendly. Using eco-friendly cleaning products for example is significantly less likely to be harmful to the health of your employees and will result in happier and healthier staff.
There are many options for businesses to use energy from renewable sources for their heating, lighting and devices.
Commercial heat pumps, draw heat from renewable sources, so are already environmentally friendly. However, when and if they are coupled with a green focused electricity supply, such as from solar panels, heating systems can become carbon neutral. This is ideal for those businesses that must adhere to stringent energy guidelines.
When developing a sustainability strategy plan for a business using energy in a more efficient way is a good place to start. This can simply be replacing all light bulbs with energy efficient alternatives. Longer-term strategies can be identified through close energy management and monitoring over time.
Find out more about solar here.
Find out more about heat pumps here.