Helping your clients fund their journey to net zero
If the UK is to reach its target of net zero carbon emissions by 2050, we all need to play our part – including everyone in the SME community.
As well as safeguarding the future of the planet, there are fiscal benefits in ‘going green’ sooner rather than later. In fact, research shows that the SME community can achieve £3bn savings by implementing simple energy efficient measures.
The importance of adopting green practices
The UK was the first global economy to commit to ending its contribution to global warming by 2050, and it has also pledged to reduce its carbon emissions by 78% by 2035 compared to 1990 levels.
Although ambitious, these targets are not out of reach. However, success hinges on all businesses pulling together and playing their part from today.
We’re all accountable
97% of the UK economy is made up of SMEs, who produce 25% of the country’s carbon emissions. With this in mind, it’s impossible for the UK to reach its climate goals without the cooperation of everyone in the business community.
Firms across the country are coming up with creative ways to mitigate climate change within their own business and their supply chains’.
For example, Tesco and other supermarkets are offering incentives such as reducing their payment terms from 90 days to 60 days, to encourage their suppliers to become more carbon neutral.
Future success and growth
Increasingly, customers are buying and engaging with businesses whose values reflect their own, and holding those who don’t to account. SMEs need to make sustainability a priority to ensure the future success of their business.
How can my clients become more sustainable?
The first thing your clients need to do in order to reduce their carbon consumption is to understand their own carbon footprint, as well as their supply chains’.
Signpost them to Carbon Trust’s carbon footprint calculator (others are available), so they can measure their performance against greenhouse gas Protocol Guidance.
Once they have a better picture of where they currently stand in terms of sustainability, your clients can consider the following:
1. Energy-efficient technology, such as LEDs which consume 11 times less energy than traditional halogen lights.
2. Smart meters, which send readings to the energy supplier to enable the business to save money by using energy more efficiently.
3. Renewable electricity generation, such as installing their own solar panels on their premises.
4. Supply chain research – according to research by consulting firm McKinsey, a typical B2C business’ supply chain creates more carbon emissions than its own operations.
5. Electric vehicles that emit fewer greenhouse gases and air pollutants than petrol or diesel cars.
6. The elimination of single-use plastics.
It’s also useful to know that solar panels and electric vehicle charge points are covered in the super-deduction.
The super-deduction enables qualifying businesses to benefit from a 130% capital allowance when they purchase a new asset or machinery.
If your client wants to leverage the super-deduction but can’t afford to buy a green asset upfront, they can use hire purchase finance – a type of asset finance that spreads the cost of the asset in instalments.
Eligibility criteria applies and only some green assets are included.
How can my clients fund their sustainability goals?
To achieve net-zero by 2050, the financial services sector must adopt a “lend green” mindset to make it easier for businesses to fund their green initiatives.
A growing number of green lenders and products are emerging, enabling business owners to realise their sustainability strategies quickly.
Do you have a client who runs a green business or offers a sustainable product or service? Or are they looking to purchase a green asset such as a solar panel?
Funding Options can match your clients with a panel of vetted green lenders.
These lenders have been chosen because they have specified that they have an appetite to fund sustainable initiatives.
Sign up to the Connect platform today to access a variety of green funding options quickly, easily and securely. Accelerate your clients’ journey to becoming net zero.
Thomas Boyd is Head of Advisory at Funding Options.