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Canary Wharf boasts some of the largest and highest green roofs in Europe

The gleaming steel and glass skyscrapers of London’s Canary Wharf reflect its rise as a world financial center. Inside, some of the world’s brightest minds develop increasingly sophisticated financial instruments that are regaining the British capital the economic prominence it enjoyed in the 19th century. But above the buzzing trading floors, a different kind of innovation is taking place. Boasting some of the largest and highest green roofs in Europe, the city is also reinforcing Britain’s role as a leader in environmental sustainability.

Column inches devoted to environmental stewardship have swelled over the past year – from The Economist to the tabloid press – as Al Gore and Sir Nicholas Stern warned of the costs of ignoring climate change. British corporate icons Virgin and Marks & Spencer announced ambitious plans to improve their environmental impact, claiming that clean air, land and water were vital to their success. With business, government and consumers joining forces, the UK is creating a model sustainable economy in which to invest and do business over the long term.

Environmental protection has long been de rigueur in Britain, with companies taking pioneering steps to reduce their impact. Business in the Community’s Environment Index, an annual benchmark of corporate environmental engagement, was developed by leading companies to give the issue prominence in the boardroom. Over the last decade, the average Index score has increased from 60% to 83%. Most participating companies (89%) now have effective environmental management systems in place, and nearly all (98%) conduct regular environmental impact reviews.

These corporate efforts are underpinned by a modern regulatory regime. The Environmental Protection Act of 1990 and the Environment Act of 1995 consolidate a variety of previous laws, supporting comprehensive legislation that covers air emissions, protection of waterways, waste management, building development and more. The Environment Agency, the environmental regulator for England and Wales, is modifying its approach so that well-managed businesses receive a lighter touch, while those who fall foul of environmental laws incur tougher penalties. It wants to work with, not against, business, recognizing the need to develop trust and mutual understanding.

This approach has strong cross-party support in Parliament. As a member of the European Union, the UK also heeds instructions from EU institutions in Brussels. The EU Emissions Trading Scheme, introduced in 2005, sets caps on carbon dioxide emissions from energy, metal, mineral and paper facilities. Each installation is allocated tradable emissions allowances, enabling companies with efficient processes that reduce greenhouse gases to sell credits to those unable to meet their quotas. Britain set one of the most stringent caps of all EU countries in the first phase of the scheme and is currently on track to double the emission reductions it pledged when ratifying the Kyoto Protocol . Later this year, the UK will introduce a Climate Change Bill that will include legally binding targets to cut carbon dioxide emissions by 60% from 1990 levels by 2050.

Two additional pieces of recent European legislation, the Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) Directives, reduce electrical waste going to landfill and limit hazardous substances in electronic equipment, respectively. The EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation comes into force in the UK in mid-2007. In addition, the EU Accounts Modernisation Directive requires large companies to report on relevant environmental matters in addition to their usual financial reporting.

These rules apply to a wide cross-section of British business. To help companies meet their obligations, the Environment Agency created NetRegs, a free web-based service designed principally for small and medium-sized enterprises (SMEs) but helpful for anyone seeking a better understanding of UK environmental legislation.

The most innovative aspects of environmental protection in the UK, however, have less to do with regulation and more to do with a widespread recognition that good environmental practice is good for business. Sainsbury’s, one of the largest supermarket chains in the UK, has saved in excess of £8m every year since 1997 through energy efficiency measures, generating 20% fewer carbon dioxide emissions. Telecommunications group BT has generated over £2m net profit by recycling obsolete equipment, in the process diverting thousands of tonnes of waste from landfill. For some companies, the environment is their business. The UK environmental industry employs 400,000 people across 17,000 companies, with an estimated annual turnover of £25bn. Examples of successful ventures range from mobile phone recycler Fonebak to reusable packaging solutions provider Loadhog to green printers Beacon Press. Between them, these companies are reducing thousands of tonnes of greenhouse gas emissions and landfill waste.

UK companies have long taken pioneering steps to reduce their impact on the environment

Still, despite widespread awareness, serious pollution incidents are caused every year by poor management, material failures and, in some cases, criminal negligence. According to the Environment Agency, there were almost 1,000 serious incidents in 2005. While this was the lowest number on record, prosecutions nonetheless increased to 317, including 28 directors – more than double the number in 2004. Fines grew by 16% over the previous year to over £2.7 million. Would-be investors are advised to look closely at the environmental practices of potential partners before making investment decisions in the UK.

Fortunately, several organizations offer help and advice on environmental matters. The Carbon Trust helps business cut greenhouse gas emissions and supports the development of low carbon technologies. The Waste and Resources Action Programme (WRAP) supports corporate efforts both to increase recycling and use more recycled materials. Envirowise suggests practical, profitable ways to minimise waste. Most trade associations also feature an environmental unit that can provide sector-specific guidance.

It doesn’t take a financial wizard to do the maths. Using fewer resources reduces cost; creating less waste increases efficiency; and aligning environmental initiatives with strategic business interests stimulates innovation and strengthens brands. As American investors increasingly put two and two together, they will recognise their counterparts across the Atlantic as a sign of things to come. Britain is forging a path not only in financial innovation, but in the equally essential, and increasingly related, management of environmental assets.

For more information, contact:
Business in the Community
137 Shepherdess Walk
London N1 7RQ
Tel: +44 (0) 870 600 2482
E-mail: daianna.rincones@bitc.org.uk
Website: www.bitc.org.uk/bie

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