When we talk about our clients’ sustainability, Net Zero and climate change, at MHA we also talk about ‘Purpose with Profit’. In short, says Mark Lumsdon-Taylor, Partner at MHA, we believe that corporate sustainability shouldn’t come at the cost of corporate profitability
Many businesses are in scope to measure, report and take action to mitigate their GHG (greenhouse gas) emissions. The UK government has made it clear that its Net Zero ambitions will not be met by relying on large companies alone and that all businesses will need to play their part in achieving the Net Zero goal and the creation of a sustainable economy.
Conversely, today’s businesses face a myriad of challenges driven by various factors ranging from post-Covid rebuilding to the far-reaching impacts on business and economies of the war in Ukraine. The rapid and unprecedented rise in the cost of doing business makes it very difficult for companies to transition, despite the climate emergency.
While green initiatives do come with a price tag attached if treated in the right way, they can add significant efficiency and value to the business, and these aspects often far outweigh the initial investment. It is important, despite the current economic context, that businesses look beyond the short- term cost and take advantage of the opportunities that ‘going green’ can bring.
When evaluating green finance options to install solar and renewable energy initiatives, the first questions from businesses often focus on the time and process required to pay off the investment. When looking at finance for green technology, it is vital to
keep cashflow either neutral (at worst) or positive. After all, businesses will often be investing in green technology to save operating costs and improve their pull to customers and clients through their green credentials.
Specialist lenders will now consider the savings generated from installing green technologies and apply them to the overall assessment of affordability. This enables businesses to avoid having to increase cash flow as the savings will in most cases meet
the payments to the lender. For most businesses, green funding in the UK is now available for up to seven years which has a huge impact on affordability.
The Green Finance and Banking team helps our clients to meet their climate change ambitions through finance-sourcing, corporate advice, identifying ways to reduce overheads through green technology and renewable energy initiatives, building relationships with industry partners and providing all the necessary structures through specialised green finance solutions.
But the benefits don’t stop there. Let’s say that your business has embarked on its ESG and/or Net Zero journey, but needs finance to continue. Beneficial financing can be taken into consideration the returns on the investment in terms of the savings the initiative will deliver to the business. In addition, a properly identified investment will often deliver cost savings to the business that pays for, or more than pays for the interest on any loans related to it. That’s great for your business, and great for the planet too. Its purpose with profit at its best.
Mark Lumsdon-Taylor, Partner at MHA