Director magazine

I was recently featured in the Institute of Directors' magazine on the issue of small businesses and energy efficiency. Read the article below or on the IoD website.

The government is keen to lead on climate change, but has discovered an unlikely ally in big business. Is this a cynical marketing ploy or a measured response to a global crisis?

October was a decisive month for Gordon Brown. Having led from the front during the bail-out of the world's financial system, he then put together a similarly bold strategy to bail out the planet. The government's plan, announced by Secretary of State for Energy and Climate Change, Ed Miliband, is now to reduce carbon emissions by a massive 80 per cent by 2050. It's a far more severe reduction than the previous target of 60 per cent. Referring to new competition for resources and an urgent need to reduce emissions, Miliband said the UK requires an energy market "that secures future supply, including investment in nuclear power, and carbon capture and storage... that incentivises cuts in emissions and does more to help homes and businesses."

Many small businesses say they could do with some of that extra help. They worry that cutting carbon emissions will add to fuel bills. And, as David Boomer, the IoD's head of energy efficiency and climate change, says, "it seems that these targets are put in place irrespective of the cost both to business and the consumer." But Brown and Miliband have unearthed some unlikely allies. A September 19 letter from UK business leaders to the prime minister called on him to beef up the speed and scope of the government's climate-change strategy. Do much more, the letter begged, and do it much faster. The request, which also went to leaders of the other main political parties, came from the Prince of Wales's UK Corporate Leaders Group on Climate Change (CLG), set up in 2005. It was signed by 18 business leaders, from companies as diverse as Anglian Water, Lloyds TSB, Sun Microsystems and Unilever.

Giving the message added spice, its signatories also included some pretty heavyweight carbon emitters, such as E.ON, Shell UK and—by association—BAA.Anyone who imagines the global economic downturn limits the UK's scope for dramatic initiatives is, it seems, mistaken. In fact, suggest the signatories, recession should be a spur, not a brake. "We believe that action cannot be delayed. Decisive action will stimulate economic activity and job creation in certain key sectors, as well as reducing costs in the medium to long term."

But for some the cry rings hollow. Environmental activist group Greenpeace was quick to describe the participation of E.ON and BAA as "hypocrisy of the purest strain"—the first because it wants to build coal-fired power stations and the second because of its airport expansion plans. So was the letter little more than a PR ploy? On the face of it, there is every reason for big corporates to prove their ecological credentials. For a year or more, their marketing consultants have assured them that UK consumers will punish any businesses not perceived to be green. But CLG co-director Craig Bennett says that green policies rest on a more fundamental realisation.

"Once you realise that it is inevitably going to happen, that the only future is a low-carbon future, then you want to get on with it sooner rather than later," he says.But companies can't do it on their own and need government to draw up a transformational plan for the economy as a whole. "The Government has to demonstrate leadership to match the rhetoric by providing incentives and support to encourage business to commercialise new green technologies and open up the green market," says Boomer."The worst thing would be for the government to do nothing or very little for a decade, and then completely change its policy—or for some future government to act in a draconian way," says Bennet.

The CLG is firmly behind the EU's Emissions Trading Scheme, supporting the auction of allowances, and the inclusion of aviation from 2012 (aviation and shipping have been left out of the 80 per cent pledge). The CLG wants much bolder green specification in public procurement, which, it says, would boost future markets for low-carbon goods and services. The group thinks Britain could gain "huge competitive advantage" by being first to produce the kind of low-carbon goods and services the world will demand this century. Small businesses, on the other hand, are catching on to the savings that can be had from good green practice.

A recent survey by the Federation of Small Businesses (FSB) found that a quarter of SMEs are environmentally responsible because of the amount of money they can save. "Small businesses are already taking action on energy efficiency, such as investing in low-energy lighting and reducing the temperature in offices," says FSB spokesman Marc Shoffman.

The spiralling cost of fuel is having a positive effect, agrees the Forum of Private Business (FPB) . But it notes that, on environmental issues, the public sector is better at receiving than at giving. "Businesses have seen patchy performance from councils in waste management and recycling," says FPB research manager Thomas Parry. "In some areas, there is not the infrastructure for recycling cardboard or plastics, let alone electrical items or batteries.

"The environmental tax take has risen by nine per cent in 2008 to an estimated £29.2bn, according to accountants UHY Hacker Young. "That compares to just £607m spent on incentives," Parry says. "This highlights what many of our members have told us—that climate change seems to be more about stealth taxation than improving the environment."