Firms feel benefit of going green

Nearly three quarters of medium-sized businesses say they have experienced at least one commercial benefit from taking environmentally responsible actions, as consumer demand for '˜green' credentials is increasingly affecting buying behaviour.

Energy. Picture: Andrew Milligan/PA Wire

The Barclays Environmental Commitment: Beyond a ‘Nice-to-Have’ report found that 73 per cent of firms had derived some commercial benefit.

More than a third, 37 per cent, of medium-sized businesses indicated that this investment had led to reduced operational costs.

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Despite the commercial benefits identified by most businesses who have invested in green projects, a quarter of businesses reported that investment of this kind was not a business priority.

In total, 82 per cent of mid-sized firms said they’d taken some form of action.

However, less than half, 40 per cent, indicated that they expect the amount they will invest in this area to increase over the next five years and only a similar amount, 39 per cent, view environmentally responsible programmes as ‘extremely important’.

Tony Walsh, head of mid-corporates at Barclays Corporate Banking, said: “It’s a mixed picture, with most mid-sized companies taking some steps to invest in green activity, but with much more still to do.

“We found that there are clear commercial and reputational benefits if businesses do more in this area, as well as growing regulatory demands to increase green investment.

“It’s up to all of us: individual companies, trade bodies, government and finance providers to come together and make sure that investment in green initiatives is accessible and prioritised sufficiently.

“If you’re a business leader and the risks and opportunities around the green agenda are not being discussed in your boardroom, you might miss out on the commercial advantages that are available and suffer reputationally, and could be left behind.”

The primary barrier to investment identified was cost, with financial concerns highlighted by one in three businesses as preventing more green investment.

Lack of funds, 19 per cent, and concerns about return on investment, 16 per cent, were the most commonly cited financial worry.

For the companies discouraged by financial obstacles, more than half, 57 per cent, think that the most effective way for these barriers to be overcome would be through incentives from government such as tax breaks or subsidies. Reputational consequence was also recognised by a significant number of leaders, with a third, 31 per cent, taking environmental action ‘because it’s the right thing to do’ and 27 per cent because they want ‘to be recognised as an environmentally responsible business’.

Regulatory demands were cited by fewer respondents as the driver behind green investment, 19 per cent.

However, four in ten, 40 per cent, do believe that existing environmental rules and regulations have had a positive effect on their business, compared to just 16 per cent who think they have had a negative effect.

The report recommends five things businesses can do to be more environmentally responsible, including updating capital equipment, raising awareness among employees, improving energy efficiency and assessing impacts of environmental trends.

Friends of the environment

The business services sector attached the most importance to environmental sustainability with 54 per cent of organisations saying it’s ‘extremely important’.

Firms in business services are also most likely to say that taking environmental actions has improved their image and credibility among customers.

In comparison, only a quarter, 25 per cent, of professional services firm ranked environ-mental sustainability as extremely important. Three quarters of professional services firms said they have taken some environmentally responsible actions.

The report found 40 per cent in this sector are to increase investment in environmental sustainability in the near future.