We live in precarious times at present, not just economically but also ecologically. Unprecedented weather events are becoming more commonplace, turning climate change into front page news and highlighting the ongoing effects on the global environment. Change is needed, and as we’ve seen from the recent COP26 conference, action is desperately required.
But how can your business contribute to this positive action around climate change? And what routes to environmental, social and governance (ESG) considerations are available when it comes to manufacturing, logistics, community engagement and routes to finance?
The need to tackle climate change head-on
After decades of warnings from the scientific community, the evidence is now overwhelming that climate change, at this point in the 21st century, is a man-made phenomenon. The Earth is getting warmer, sea levels are rising and weather events are becoming more extreme, more unpredictable and more dangerous to human life.
Human-induced warming reached approximately 1°C above pre-industrial levels in 2017 and is continuing to rise. If left unchecked, this gradual warming of the planet will melt ice caps, raise water levels and will, eventually, see many of our major cities under water.
In his speech to the COP29 delegates, the naturalist and conservationist, Sir David Attenborough made it clear that action is needed to halt this warming:
"Our burning of fossil fuels, our destruction of nature, our approach to industry, construction and learning, are releasing carbon into the atmosphere at an unprecedented pace and scale. We are already in trouble. [But] if working apart we are a force powerful enough to destabilise our planet, surely working together we are powerful enough to save it."
As the generation that has allowed climate change to escalate to such a degree, the ball lies in our court to take action – and that means factoring green issues into your business planning.
How your business can become greener
As business owners, it’s imperative for us to put sustainability, green thinking and sound ecological planning at the heart of our decision-making for the future.
Heavy industry, energy production and agriculture are some of the key sectors that are impacting the environment and driving up the speed of climate change. But all businesses in all sectors need to think about ways to take action, including reducing their carbon footprint, becoming more sustainable and looking at green banking and finance options.
So, what positive action could your business take? Here are a few simple ways to make your business activity greener and more sustainable:
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Reduce your use of plastics – 100 million tonnes of plastics are made annually across the world. As a non-biodegradable material, plastics don’t break down naturally and are gradually polluting every area of the planet. Aim to cut down your use of plastics in your everyday operations and switch to biodegradable options that offer a green alternative and are kinder to the environment around us.
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Go paperless as a business – paper production involves a huge amount of natural resources and has a negative impact on our environment. If you’re still printing out meeting notes, payslips and other business documents in hard copy, now is the time to go paperless. Switching to digital and becoming paper-free helps you to reduce your environmental impact and start cutting down your carbon footprint.
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Assess the environmental impact of your own operations – it’s vital to review your own operational processes and the impact they’re having on the planet. Set yourself green targets as part of your corporate social responsibility (CSR) strategy and choose environmentally friendly materials, manufacturing methods, logistics and packaging. And remember to track and record your performance against these green targets.
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Check your suppliers’ eco-credentials – you can take proactive action to reduce your own carbon footprint as a business, but have you thought about the impact that your key suppliers may be having? Review your suppliers’ eco-credentials and opt for companies that are playing their part in becoming more sustainable. Small changes, like using local suppliers to cut down air miles and carbon emissions, can have a big effect.
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Think carefully about reducing travel – emissions from cars and planes are all part of the carbon problem. If you can reduce travel and still maintain your normal operations, it makes sense to downsize your use of vehicles and transportation. Embracing hybrid working allows your team to work remotely part of the week, cutting down on commuting time. And replacing international in-person meetings with Zoom video meetings reduces your need for long-haul plane travel – another driver of climate change.
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Go green with your financing – switching to green finance is another option that will have a positive impact on combating climate changes. The World Economic Forum defines green finance as ‘any structured financial activity – a product or service – that’s been created to ensure a better environmental outcome’. So, rather than using financial products that may indirectly finance and support deforestation in the Amazon, or drilling in the North Sea, you can, instead, opt for sound, sustainable finance products.
ESG finance and why it should be in your agenda
Environmental, social and governance (ESG) finance may be a relatively new area within the world of financial services, but it’s a sector which is experiencing rapid growth. In short, ESG finance is a catch-all term for all forms of green and sustainable finance, whether it’s sustainable loans, green bonds or financing for green projects.
As the name suggests, it’s a way of gauging the eco-credentials of the organisation that your business is engaging with, with a view to choosing investments, funding and financial products that have the most positive impact on the three core criteria of ESG.
These are:
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Environment – this element focuses on the perceived environmental impact of the company and its services, and how these are contributing to global climate change. Areas of assessment include energy use, waste, pollution, natural resource conservation, and treatment of animals, wildlife and biodiversity etc.
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Social – the second element assesses the social impact and intrinsic values of the company. Is the company well-embedded and trusted in its community? Are its services providing positive impacts in the community, such as charity programmes or green projects? Or is the company funding socially disruptive elements such as promoting discrimination or encouraging poor health and safety etc.
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Governance – the third and final element looks at the underlying governance of the company. This involves checking how well it meets its mandatory requirements around things like accounting checks, legal compliance and being proactive about preventing fraud, bribery, corruption or conflicts of interests.
By factoring these ESG considerations into your overall planning, you can make choices that are environmentally friendly, sustainable for the planet and that help tackle climate change.
Helping you fund a greener future
At Capitalise, we have a clear focus on positive growth and helping the UK’s small and medium-sized enterprises (SMEs) to set the best foundations for the future.
A big part of this positive vision now includes thinking about the green finance options that are available in the market – and making it as easy as possible for SMEs and their advisers to make sustainable choices that result in green outcomes.
We highlighted the importance of sustainability in the construction sector in a recent blog post. But the clear message coming out of COP26 is that climate change is something that can only be managed and stabilised if all industries, sectors and business types take action.
With a broad network of 100+ lenders and finance specialists, we can automatically search the marketplace for you, to find the ESG-linked financial products that will have the most positive impacts. And by setting the right green foundations for your recovery and growth, you can be confident that your company’s goals will also be aligned with tackling climate change.
If you’re looking into green options for your business and want to know about the best possible ESG implications of your financing, please do get in touch for a chat.
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Call us on 020 3696 9700
