11 March 2022
Northern Ireland’s financial sector is dominated by small and medium sized enterprises (SMEs). The Department for Business, Energy, and Industrial Strategy estimate that 99.8% of all businesses in Northern Ireland employ fewer than 250 employees, so engagement from small businesses is key to achieve Net Carbon Zero and other sustainability targets. But what are the benefits of sustainability for SME’s? And what steps can you take to ‘Start the road to Net Zero’?
How does sustainability affect profit?
The impact your business has on society and the environment is becoming more and more important to people and businesses. Many business owners do not place sustainability initiatives at the core of their business strategy as they do not believe the benefits justify the costs. Improving sustainability and energy efficiency has the potential to not only increase your business performance and profit, but to reduce your environmental impact and help to build a better reputation with your customers and suppliers.
What are the benefits of sustainability to a business?
Improving sustainability within your business can have many benefits, including:
- Greater energy efficiency;
- Reduced costs;
- Reduction in waste;
- Increased productivity;
- Ability to comply with current and future government legislation;
- Improved reputation and competitive advantage; and
- Stronger ability to attract customers, suppliers, employees, finance and investors.
Each of these benefits will provide long term cost savings and help to increase your overall profitability.
Will improving sustainability help improve my financial performance?
Actively working to improve sustainability will often improve the profitability of your business, but to do this you must seek to improve your operational efficiency. In doing this you will be able to reduce resources, minimise waste, save energy, improve efficiency and make long term strategic savings.
What government support is available?
There are various grant and allowances available to your business to enable you to become more sustainable and energy efficient, including:
- Businesses can claim enhanced capital allowances on new electric vehicles and zero-emission goods vehicles, meaning 100% of the cost can be deducted from taxable profits;
- Super Deduction Capital Allowances – From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim a 130% super-deduction capital allowance on qualifying plant and machinery investments; a 50% first-year allowance for qualifying special rate assets.
- Business can also apply for a voucher towards the costs of electric vehicle charging ports, due to end soon;
- R&D tax relief provides businesses with a tax efficient way to invest in qualifying research and development. R&D tax relief enables businesses to deduct an additional 130% of their qualifying expenditure against taxable profits.
How can I successfully implement a sustainability strategy?
To successfully implement a sustainability strategy, your business will need to analyse their operations. This will help them you to understand how you can maximise your efficiency while minimising your emissions. This will require strong and focused leadership to instil innovative, sustainable business practices into everyday business life.
Businesses should consider the following when implementing a sustainability strategy:
- Integrate sustainability as part of your business mission;
- Clearly communicate your sustainability goals for the future;
- Consider how changes will affect your customers;
- Celebrate success when you achieve new sustainability goals.
Creating a sustainability strategy and embedding this in your business culture isn’t easy, you will need to implement sustainable practices and initiatives into everyday business life. This will take strong leadership, a commitment to change, and a focused view of your goals for the future. It has its benefits however, as sustainable practices often lead to improved efficiency and innovation, which will help to improve profitability in the future. Government support is also potentially available to help your business on their sustainability journey. For more information on what government support is available, please get in touch.