Preparing Your Business for the Green Economy

Economic climate affecting your business

The economic and legislative landscape that small and medium-sized enterprises (SMEs) have to navigate is changing.  In the UK, businesses are experiencing the knock-on effects of a rising global demand for energy, fuels and raw materials; resulting in increasing costs. For example, since 2005 UK gas and electricity prices have risen by 101% and 66% respectively. With increasing global demand for speciality metals used in high tech and low carbon technologies, there is also an increasing risk of resource scarcity, likely to result in price volatility with interruptions in supply, significantly impacting on business.  This was illustrated in 2011 when 29% of profit warnings issued by FTSE350 companies were attributed to rising resource prices.  This is also seen as a significant risk by manufacturing sector – a sector which provides the components and products used and sold everyday by all businesses – with a 2012 survey by EEF highlighting that the shortage of raw materials was deemed to be a risk by over 80% of Chief Executives in manufacturing companies.
 

Legislation affecting your business

In an attempt to reduce our economy’s reliance on fossil fuels and secure supplies of resources, in 2008 the UK Government set greenhouse gas (GHG) emission reduction targets that will affect all sections of society, with the UK Climate Change Act. In 2009, Scotland followed with its own Climate Change Act. With a GHG reduction target of 80% by 2050 and 34% for the UK and 42% for Scotland by 2020, businesses will have to play their part to meet this challenge. In 2012, Scotland also introduced Waste Regulations to achieve a recycling rate of 70% for businesses and households and a ban on organic municipal waste going to landfill by 2025.

These are the first steps towards a green economy -envisaged by the UK Government as one that will grow sustainably, be resource efficient and low carbon; allowing businesses to take advantage of the expanding markets for greener products and services. The Green Economy policy timeline provides an overview of all the incentives and regulations set by the government to help society make the transition to a green economy.

SMEs are currently not affected by this legislation, with the focus now being on the public sector and large organisations.  However, accounting for 99.9% of all enterprises and 59.1% of all employment – SMEs have a vital role to play in moving towards a green economy. SMEs will need to pursue green growth, maximise their energy and resource efficiency, innovate, improve infrastructure, increase resilience, adapt to challenges and help their customer make informed choices.

*Please note that the above information was up to date as per publishing date on  31 October 2012

 

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