|SMALL BUSINESSES DIVIDED OVER ENVIRONMENTAL MEASURES.
November 27 2009.
More than one in five small firms are delaying embracing environmentally-friendly measures because of the recession but almost as many are being encouraged to implement them, a survey carried out by the Forum of Private Business (FPB) suggests.
In all, 22% of business owners on the FPB's Environmental Member Panel said that economic conditions had made them less likely to pursue environmentally-friendly solutions. However, 17% said they are even more likely to do so.
The majority of respondents (61%) said the recession had no impact on their environmental policies.
A quarter of panel members (26%) have as yet implemented no environmental measures, but 22% have formal plans and 56% informal policies in place.
"When small businesses are considering implementing environmentally-friendly policies, the will is certainly there but it is often thwarted by the perception of steep costs and a lack of information and support," said the FPB's Policy Representative, Matt Goodman. "It is important to emphasise that measures to reduce carbon emissions can mean savings on the bottom line, but we also need a more joined-up approach from the Government including a system of workable incentives that are rewarding rather than punitive."
In total, around two thirds of respondents identified barriers to implementing energy-efficiency processes. The main two reasons were the costs involved and because businesses in rented premises saw no reason to pay for improvements of benefit to their landlords.
Other barriers include:
· Planning issues
· Payback period
· Lack of support
· Lack of information on technology
· Suppliers over-packaging their goods
· Lack of knowledge about where to access grants and information
· Technology not being advanced enough to be practical, such as light emitting diodes (LEDs) compared to standard light bulbs.
Most environmentally-proactive business owners on the panel are motivated by a sense of responsibility. In all, 83% are pursuing environmental strategies do so because they believe it is 'the right thing to do'.
Other motivations are reputation (57%), saving money (48%), because it makes 'business sense' (48%), assistance in winning government contracts (13%) and recruiting the right people (13%). Just a few of the panel members said that environmental regulations were a factor.
The most popular measure for improving energy efficiency and reducing carbon emissions is regularly monitoring fuel bills (52%), followed by upgrading commercial premises (48%), investing in technology (43%), reducing the use of resources (39%). In all, 22% have launched environmentally-friendly products and services and 9% have taken action to reduce emissions by working directly with their supply chain.
Incentives suggested by panel members to encourage business owners to put in place environmental measures were largely financial.
In all, 30% want more funding or more easily accessible grants, while 23% want a faster return on investment (ROI) or improvements to their bottom lines. In addition, 16% want clarification and one point of contact for environmental compliance and support and others called for greater emphasis on better resource management rather than monitoring carbon emissions.
Just over 10% of respondents want a greater commitment form larger companies and the public sector, which are considered to be inefficient compared to the relative efficiency of small businesses. A similar proportion called for greater 'personal responsibility'.
Panel members told the FPB that encouraging them to put in place environmental policies using a 'stick' approach (mainly taxation and excessive regulation) without real alternative strategies is unhelpful.
Although some said they would welcome environmental regulation, they believe it should be proportionate, clear and not imposed by multiple departments. Many are concerned that the environment is being used as an excuse to increase tax and fear that environmental regulation and 'green taxes' could make the UK less competitive.
They identified the need for clearer policies and information about the environment and resource management. There is also a perception among many that environmental support - particularly funding - is short-term and piecemeal rather than consistent and sustainable.
Rather than spending money on large-scale awareness campaigns, many panel members said the Government should concentrate on working to help business owners take smaller steps but emphasised that employers should also take responsibility themselves for processes such as switching off lights and machinery.
Further, respondents believe that the infrastructure required to implement environmental policies on energy, transport and business support should be improved.
Respondents rated the effectiveness of a number of potential environmental solutions:
· VAT reductions for environmentally friendly investments (50% 'very effective', 20% 'effective' and 30% 'ineffective')
· Enhanced capital allowances for energy efficient solutions (48% 'very effective', 43% 'effective' and 9% 'ineffective')
· Simplification of grant schemes (47% 'very effective', 47% 'effective' and 6% 'ineffective')
· Simplification of and/or less regulation (42% 'very effective', 47% 'effective' and 11% 'ineffective')
· More grants for SMEs (42% 'very effective', 42% 'effective' and 16% 'ineffective')
· Industry-specific guidance (41% 'very effective', 41% 'effective' and 18% 'ineffective')
· Better support and advice (35% 'very effective', 50% 'effective' and 15% 'ineffective')
· Taxation premiums on energy, water and transport (5% 'very effective', 24% 'effective' and 71% 'ineffective')
· More regulation to force businesses to improve environmental practices (23% 'effective' and 77% 'ineffective').
The results of the FPB's panel research were provided to the Department of Energy and Climate Change (DECC) on 27 November 2009 at the latest external stakeholders meeting for its Small Emitters Project. The project is investigating the part played by small businesses in meeting the UK's carbon reduction commitments.