Print article

Britain is a leader in the field of environmental sustainability

Despite the recent global economic downturn, the gleaming steel and glass skyscrapers of London’s Canary Wharf continue to reflect its rise as a world financial centre. Inside, some of the world’s brightest financial minds are regaining the British capital the economic prominence it enjoyed in the 19th century. Today, London is the centre of trading for a variety of sophisticated financial instruments, carbon emission credits and much more. But innovation is not confined to the trading floor. Overhead, the largest and highest green (vegetated) roofs in Europe are reinforcing Britain’s role as a leader in a different field of green – environmental sustainability.

Column inches devoted to the environment have swelled over the last few years – from The Economist to the tabloid press – as Al Gore, Sir Nicholas Stern and the International Panel on Climate Change (IPCC) warn of the costs and repercussions of ignoring climate change. British corporate icons Virgin and Marks & Spencer have taken on ambitious projects to improve their impact, realising that clean air, land and water are vital to their success. With industry, government and consumers joining forces, the UK is creating a model sustainable economy in which to invest and do business for 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 risen from 60% to 82%. 85% of participating companies now have an effective environmental management system in place, and 78% publicly report their climate impact. 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 the heaviest polluters, with the scope of affected industries expanding this year as Phase II of the scheme is launched. 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. Also 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 pieces of 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 came 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.

In the UK, there is widespread rec0gnition that good environmental practice is also good business

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 $16m every year since 1997 through energy efficiency measures, generating 20% fewer carbon dioxide emissions in the process. Telecommunications group BT has generated over $4m net profit by recycling obsolete equipment, thus diverting thousands of tonnes of waste from landfill. Barclays Capital, Swiss Re and Merrill Lynch are among the major financial institutions to have set up carbon trading desks in London, capturing half of the world’s $12 billion trading volume in 2007.

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 $50bn. 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.

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 just over 900 serious incidents in 2006. While this was the lowest number on record, prosecutions nonetheless increased to 380, including 29 directors. Fines grew by 30% over the previous year, to $7m. 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. Business in the Community’s May Day Network, the UK’s largest group of companies committed to taking action on climate change, provides information on the latest solutions for improving the climate impact of operations, employees, customers and suppliers. The Carbon Trust provides support to help business cut greenhouse gas emissions and supports the development of low carbon technologies. Envirowise suggests practical, profitable ways to minimize waste. The Waste and Resources Action Programme supports corporate efforts both to increase recycling and use more recycled materials. Most trade associations also feature an environmental unit that can provide sector-specific guidance. It doesn’t take a financial wizard to do the math. Using fewer resources cuts costs. Reducing waste increases efficiency. Aligning environmental initiatives with strategic business interests stimulates innovation and strengthens brands.

As American investors increasingly put two and two together, they will appreciate the foresight of their counterparts across the Atlantic. 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

Top

All pages are copyright © of Roxby Media Ltd. British American Business is a Roxby Media publication - Disclaimer