A transition to the low carbon economy offers significant business growth opportunities across the regions and nationally, but not many businesses know how to take advantage of it. Dr Polina Baranova, Senior Lecturer in Strategic Management at the University of Derby, shares her tips for ‘staying ahead of the curve’ by being green and competitive.
According to the latest report from the Office for National Statistics, the low carbon economy in the UK grew by 5% to £42.6 billion in 2016, from £40.5 billion in 2015 – accounting for around 1% of total UK non-financial turnover.
The low carbon and environmental goods and services (LCEGS) sector employed 208,000 full-time equivalents (FTE) in 2016, an increase of 3.3% when compared to 2015 figures. These figures indicate a growth in the market for LCEGS and with that comes a range of opportunities for companies to supply into the LCEGS market and be part of the ‘green growth’.
However, our research indicates that not many companies, particularly SMEs, identify easily with these opportunities as they often focus on well-explored and familiar markets. As a result, they might be missing on the emerging marketplaces for LCEGS and the exciting new opportunities for business growth and development.
How to take advantage of the opportunities presented by the green growth:
1. Consider supplying low carbon and environmental goods and services
The demand for goods and services that help organisations and individuals to cut their carbon footprint is on the rise. Have you considered exploring opportunities to supply goods with environmental benefits? This could be by sourcing from sustainable sources, changing packaging, using sustainable couriers or indeed completely redesigning your products to align with circularity principles. (See the Ellen MacArthur Foundation for more information.)
In the services sector, there are numerous and growing examples of sustainability appeal in both individual and business-to-business service delivery models; examples include eco-tourism, green logistics and various environmental management accreditation services.
2. Watch out for changes in consumer preferences
As consumers become more sustainability conscious, the demand for goods and services that support their aspirations to protect the natural environment will strengthen. These changes in demand need to be carefully monitored and stimulated.
A number of companies already offer flexible finance to buy into renewable energy technologies. Similar practices apply to green builds and infrastructure projects. Watch out for the shifts in customers’ preferences in your sector and design product and service solutions to deliver on sustainability.
3. Get environmental management accreditation that fits your strategy
As the competitive landscape changes to reflect the consumer preference for low carbon and environmental products and services, the attainment of an environmental management accreditation to strengthen your business’ green credentials becomes rather timely.
Not only will it help your business to reduce its carbon footprint, support your sustainability strategy and get access to green supply chains, it could also strengthen your green brand and pro-sustainability reputation.
4. Look for green funding and finance
The lack of finance and ability to attract funds from external sources is seen as one of the major limiting factors preventing businesses from engaging with sustainability initiatives. This is not surprising, as some of these initiatives require significant capital investments, so any support from local government, sector regulators, UK, EU and international funding agencies is worth considering.
5. Watch out for energy efficiency grants
In your efforts to improve the energy and resource efficiency of your business, it is vital to strike a balance between being green and being competitive. Cutting your energy costs should result in cost savings, while better lighting, heating and water supply systems could improve your operational performance.
Derby City and Derby County Councils, as part of the ERDF-funded collaborative project with the University of Derby, offer energy efficiency grants for SMEs operating in Derby and Derbyshire. SMEs can apply for grants of up to £15,000 towards the cost of energy efficiency measures in their premises, and the grant can cover up to 65% of the cost of the work.
6. Don’t miss opportunities presented by the major infrastructure projects in the region and nationally
Landmark infrastructure projects offer an excellent opportunity to create new and support existing supply chains. These projects are in a position to have a major impact on the development of responsible supply chains, which are designed and managed with minimum impact on the natural environment.
The HS2 project is promising to deliver on sustainability values, which are an integral part of the supplier selection process. They require suppliers to demonstrate their sustainability credentials in the tendering process and deliver against HS2 sustainability requirements in the contract, and even try to outperform these.
7. Network, network, network
To understand, harness and forge business growth opportunities, it is important to get out and about. Be selective about which networks you are part of and research your local scene before embarking to venture further. In the D2N2 LEP region, there are a number of well-established networks that offer business advice and support with energy efficiency initiatives.
The ERDF Low Carbon Business Network hosted by the University of Derby offers support to SMEs with access to regional supply chains, attainment of environmental management accreditations and a broad range of professional custom-designed project assistance supporting business growth and development. Being part of a sustainability-centred network helps businesses to develop joint sustainability practices and access to LCEGS markets. This might also have a positive spill-over effect across various sectors where businesses operate and in the local communities.
I hope these tips will help you advance the sustainability orientation of your business and strengthen its competitiveness further. The opportunities are out there – so get fine-tuning for green growth!