On business sustainability
Jon Bentley, Smarter Energy lead, IBM Global Business Services
Capital will remain difficult to secure and there will be intense competition between alternative projects. Minimising up-front investment and securing a reliable flow of benefits that can be monetised will be vital. So, projects that foster the efficient use of resources, reduce waste and avoid taxes, penalties and mitigation costs from what waste does remain will be the most attractive. Unfortunately, cleaner sources of energy that are also more expensive are likely to suffer with less generous Government support.
Despite the gloomy outlook, the essential energy challenges remain and billions will be spent in the coming decade as we address them. Our economy remains energy dependent, yet the UK is committed to its carbon targets. We have no choice but to replace much of our existing generation capacity as it reaches the end of its life and a smarter end to end energy system is needed to secure supply and deal with the variability of renewable generation and electric vehicle charging. The government is pressing ahead with the nationwide smart meter programme and is bringing in the Green Deal to foster energy efficiency.
With the amount of change and investment in the energy sector, there are opportunities for businesses large and small. The winners will be those that can combine innovation and collaboration with practical, efficient execution. Results will count more than vision in the years to come.
The central challenge facing green business in 2012 is to show the synergy between sustainability and cost reduction, while busting the myth that there’s any contradiction between the two. This means winning the argument that times of austerity demand more efficient organisations. 2012 will therefore be a particularly strong year for demonstrating the financial value of and the direct, measurable profitability from green innovation. Products and services delivering enhanced energy efficiency and reduced resource use will naturally perform well in an economically pressurised times.
There is a glimpse into future business resilience at www.wtf.org.uk/gamechangers. Small nimble enterprises are racing ahead with leaner business models and perhaps in 2012, we will start to see such approaches migrate across to big business in order to secure increased future-proofing.
For example, there is a raft of emerging peer-to-peer social networking sites that enable and even glamorise collaborative consumption – the re-use of household goods and clothes. This approach could start to spread into mainstream retailing.
There are also many opportunities for businesses to support the reversal of biodiversity loss. Leisure and tourism companies have options to invest in biorock projects, which are currently aiming to restore coral reefs in Bali and Indonesian waters or food businesses could encourage the scale up of agroforesty programmes where native trees and crops are planted in the same space.
Open loop initiatives are also on the rise where numerous web platforms act as dating agencies to help match waste with resource requirements. Greater collaboration within and across business sectors will achieve a more circular economy.
We are just scratching the surface of new innovative approaches to doing business in ways that protect the world’s natural assets and this will start to escalate in 2012.
When money is tight, business naturally seeks ways of economising. Those organisations, which take the opportunity to improve business performance by using less energy, wasting fewer raw materials and looking for ways of re-using resource, are more likely to weather the economic challenges. Actions that can have a real impact range from simply turning down the heating right through to extending the service life of equipment.
David Powell, economics campaigner, Friends of the Earth
Janez Potocnik, European Commissioner for the Environment, describes the move towards resource and carbon efficient business as a “global megatrend”, particularly as the economic squeeze continues. Doing more with less is a huge opportunity, if not an imperative, for business of all shades – whether they consider themselves ‘green’ or not.
By far the biggest challenge for most businesses is the lack of certainty around the overall national and international direction of green policy and the potential financial implications and the increasing quagmire of UK legislation – especially around energy and carbon. This creates problems for all business as energy and carbon are ubiquitous costs and the overall lack of a clear direction means that business cannot effectively plan because there is a large uncertainty around strategic energy and carbon costs as well as the potential size of any Feed-in Tariffs.
Opportunities for business in the solar industry are now severely limited since the Feed-in Tariff has been structured in such a way that it is only suited to wealthy homeowners and very small scale projects. The last 18 months have shown that solar technology and its incentive scheme is effective and there is a demand for it, but these changes mean investors will no longer drive the market, which is chopping this promising and growing industry off at the knees. Our research indicates that domestic solar is the preferred technology homeowners would like to see more of in their community, with 40 per cent of those polled choosing it over other methods, which makes the Government’s decision to stifle this industry even more baffling.
Because we need so much investment in our energy infrastructure the fact remains that the renewables sector is one of the few areas where growth is certain for the foreseeable future. Offshore wind continues to get the lion’s share of attention, but there will continue to be opportunities in the onshore sector too. Despite the ongoing issues with solar and the sub-five megawatt Feed-in Tariff, that technology will have an important role to play going forward, particularly as the technology costs fall. The development of marine renewables will continue to be exciting and there is an opportunity for the UK to really lead the world in developing the full potential of this technology.
The Government is at last committed to examining thoroughly whether running more purposeful energy saving programmes can reduce the need for new power stations. However the “jury is out” as to whether there are as yet sufficient policies in place to minimise electricity demand in particular.
Maria McCaffery, chief executive, RenewableUK
Job creation in the wind industry is continuing even though other sectors are contracting during the economic downturn. In December, Siemens submitted a planning application to build a wind turbine factory in Hull, which will employ 700 people, and many more in the supply chain. The wind turbine tower manufacturer Mabey Bridge in Chepstow has just announced plans to double its workforce to nearly 200, and to operate 24 hours a day to meet demand. Announcements like these serve to boost business confidence and optimism as we approach 2012.
RenewableUK has published a report demonstrating the employment potential of the sector between now and 2021, outlining various market development scenarios. Under the medium growth scenario, nearly 90,000 people will be working in the wind and marine energy sectors (including the supply chain) by 2021. Research such as this strengthens the mood of optimism in this dynamic sector.
The priority for the green tourism sector for the coming year is undoubtedly that of demonstrating the business value of sustainability – its potential to drive savings and to bring competitive marketing advantage to help attract customers. Increasing the accessibility of information about green savings is part of building on existing momentum. From the GTBS for example, there will be new online information pages, which detail exactly how and where energy (and therefore cost) savings can be achieved.Despite economic pressures, the business travel and events marketplace is looking more than ever to mind the ‘green imperative’. Reflecting this, the GTBS has been fortunate to form partnerships with two influential booking agencies, BSI and Inntel, over the last few months. Both are working on featuring GTBS gradings in their venue listings to help guide bookers to the greenest options.On the leisure tourism side, it is vital that consumers’ interest in green is maintained during an uncertain economic climate, and a revamp of our own consumer-facing site is underway.Another opportunity for green tourism stems from the disappearance of many tourist boards and regional development agencies, meaning that business and marketing support at destination level is almost non-existent in parts of the UK.