6 reasons it pays to go green
Read time : 5 mins Added: 27/10/2020
Going green is no longer a luxury for businesses. Growing consumer interest in green issues and ambitious targets for businesses to be net zero by 2050 mean that making efforts to be more sustainable is a necessity if businesses want to remain competitive.
And while some companies may understandably be concerned about the financial implications of becoming more eco-friendly, going green can be a profitable decision as well as an ethical one. In fact, Energy Minister Kwasi Kwarteng has suggested that UK firms could save as much as £6 billion by lowering their energy use by 20% by 20301. We take a closer look at the reasons it can pay to go green.
1. People are willing to pay more for green products and services
While making changes to your manufacturing process or materials to make products greener, or making your business infrastructure more sustainable, may come at a cost, this can be offset by being able to charge more for your products or services. The ‘green pound’ is becoming increasingly prevalent, with a new generation of eco-conscious consumers willing to spend more on products with solid sustainability credentials.
Research from the Natural Marketing Institute shows that consumers are willing to spend up to 20% more on products and services that are environmentally sound, while a study by Wunderman Thompson Intelligence found that 70% of people would be willing to pay higher costs for sustainable goods2. In particular, products that can be reused or recycled can demand higher price-tags, with a global study by Accenture showing that more than half of consumers would pay a premium for such items3.
Even in a difficult economy, people’s desire for green products is thriving. A recent poll by global health company Essity showed people are willing to spend around 12% extra on eco-friendly goods, with 81% of respondents saying that environmental issues have become even more important to them during lockdown4.
And it’s not just consumers willing to pay more for green products and services – B2B companies can benefit from the increased focus on procurement policies which prioritise environmentally friendly supply chains.
2. It can help you attract and retain the best employees
Much like consumers, employees are increasingly attracted to businesses with green credentials. Research found that 60% of UK job hunters research a potential employer’s sustainability commitments before accepting a position, while 18% of workers overall and 34% of millennials wouldn’t work for a company they felt was harming the natural world5.
Being more sustainable is also known to have a positive impact on employee morale, which in turn boosts staff retention.
If firms want to attract and keep the best talent, and avoid the cost and productivity implications that come with high employee turnover, they should be taking clear steps to going green.
3. It can improve productivity
Studies have highlighted the link between working in green buildings and being more productive, with researchers at Harvard finding that employees working in green-certified buildings had higher cognitive function and got better sleep, making them more productive during the day6.
Research also suggests that working in a greener environment can lead to a significant boost in employees’ wellbeing, reducing absenteeism. Construction company Skanska found moving its Doncaster base to a new, greener facility resulted in 3.5 times fewer sick days being taken across the year compared to its other UK offices7.
Making small improvements to your working environment, like setting up a green space and putting measures in place to reduce energy and water consumption or looking for an office space which has good green credentials could give your productivity a welcome boost.
4. It can help lower business costs
While making sustainability improvements can require some upfront investment, it can lead to savings in the long term. For example, improving your energy efficiency with improved insulation or LED lighting can significantly reduce your energy bills. Also, renewable energy technologies, such as solar panels, can pay for themselves in just a few years.
Simply having a more sustainable mindset can also generate cost savings. For example, going paperless will save on ink and paper, which could add up to significant savings across the whole business. Similarly, taking the time to always plan the most efficient routes for deliveries or business travel will cut down on carbon emissions and fuel costs.
5. It can give you a competitive advantage
As consumers become more eco-conscious, companies seen as being ‘green’ will be at an advantage. Research by the Natural Marketing Institute shows 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. Similarly, Wunderman Thompson Intelligence’s research shows that 83% of people would always pick a brand with a better record of sustainability8.
However, in order to benefit from this competitive advantage, businesses need to ensure they are making customers aware of their sustainability credentials. Highlighting green initiatives on your social channels or adding details to product packaging and having a dedicated sustainability section on your website can all help raise awareness of your efforts.
6. It can help you access finance
Companies with green credentials are increasingly attractive to investors, with climate impact often among the criteria investors use to assess suitability. Sustainable investment reached record levels in the first half of 2020, according to research provider ETF Flows. Commentators have suggested that the coronavirus pandemic has accelerated the shift towards green investment and is driving increased interest in companies which are better managing social issues9.
There can also be financial incentives for businesses looking to make green improvements. Businesses investing in a lower carbon future can access discounted lending with our Clean Growth Financing Initiative (CGFI). The fund is designed to help businesses fund projects which will reduce their environmental impact through cutting emissions, increasing energy and water efficiency, reducing waste and moving to low-carbon transport.
Get more information on the CGFI and see the full eligibility criteria
Sources
- https://www.energylivenews.com/2020/03/03/uk-businesses-could-save-as-much-as-6-billion-by-cutting-energy-use/
- https://intelligence.wundermanthompson.com/trend-reports/the-new-sustainability-regeneration
- https://newsroom.accenture.com/news/more-than-half-of-consumers-would-pay-more-for-sustainable-products-designed-to-be-reused-or-recycled-accenture-survey-finds.htm
- https://www.independent.co.uk/news/uk/home-news/lockdown-eco-friendly-buying-products-uk-a9629861.html
- https://www.totaljobs.com/advice/would-you-be-willing-to-reduce-your-salary-for-the-planet
- https://news.harvard.edu/gazette/story/2017/02/study-opens-the-door-to-better-sleep-work-and-health/
- https://www.skanska.co.uk/about-skanska/media/press-releases/186562/Skanska-office-features-in-new-industry-report-on-healthy-green-buildings
- https://intelligence.wundermanthompson.com/trend-reports/the-new-sustainability-regeneration
- https://www.morningstar.co.uk/uk/news/199190/record-shattering-year-for-sustainable-investments.aspx