Smart money: overcoming the green finance barrier

Smaller businesses account for roughly 50 per cent of the UK’s business-driven emissions, but according to a survey conducted The British Business Bank, 35 per cent of small businesses cite costs as a barrier to sustainable growth.  

The perceived costs of green technologies, energy management solutions, and sustainable switches can deter businesses from making choices that will ultimately improve their competitiveness whilst working towards green targets, but there are an abundance of finance and funding opportunities available in the market to subsidise the costs of these solutions and encourage businesses to pursue net zero.  
 
It is often the case that before a business can access these solutions, they must first have a robust and actionable sustainability strategy with concrete plans to reduce energy use and emissions.  

Understand your costs  

A proper assessment of your financing options needs to be based on reasonable, accurate cost estimations. This cannot be done without the development of a tangible sustainability plan which highlights the key green technologies and green strategies your organisation plans to take to reach net zero.  
 
For example, a policy proposal such as “we aim to reduce energy consumption” is too vague to indicate clear financial costs, as the strategy could cover all manner of things. Whereas if your organisation has properly assessed its site’s energy consumption, identified problem areas, and strategised solutions, a policy like “reduce energy consumption by an estimated X GWh annually with the installation of Y LED bulbs in our factory space” outlines a clear example as to the technology you plan to pursue, its quantity, and its application. This will help your organisation draw up realistic and accurate financial plans.  

Understand your technology  

Once your sustainability plan has been developed, you will be able to focus on the key technologies relevant to this plan. 
 
While there are general financing options available which are indiscriminate in their application, some technologies, such as solar panels and EV chargers, will have specific funding pots available just for those technologies. By understanding which technologies you plan to implement, you can narrow your focus on the most pertinent finance solutions, tuning out unnecessary financial noise.  
 
Taking the example of EV chargers, organisation’s will find their search for finance much easier when exploring EV specific grants, such as the Workplace Charging Scheme from OZEV, or NatWest’s own Green Asset Finance which is available specifically for zero emission vehicles alongside other green technology solutions.  

Build you case  

Your green finance applications will run far smoother and yield desirable results if backed by a solid case. When applying for a green loan or grant, banks want to understand how it will be used to generate real carbon savings, improve the sustainability of your business, or improve efficiency.  
 
Banks want to be able to tell sustainability success stories and will be hesitant to finance green projects that border on greenwashing or appear ill-thought. Here are some key details to include in your finance application:  

• The technology or green product/service you wish to acquire.  
• How this product/service will be effectively integrated into your organisation. 
• The anticipated carbon, cost, and energy savings, backed by accurate data.  
• Why this product/service is essential to your sustainability strategy. 
• The estimated costs and loan/grant amount required. 

Plan for success  

Some finance options are loan or asset-based, meaning your organisation will have a continued obligation to upkeep and successfully implement a technology or solution once a loan has been used to finance it.  
 
Therefore, planning for the success of your sustainability strategy and having measures in place to ensure effective delivery before the product or service has even been purchased will put your organisation in a strong position to succeed and honour the conditions of your loan.  
There are various ways your organisation can plan for this, such as by upskilling your staff with green training to increase company awareness and understanding when it comes to sustainability, engaging them with green solutions. This story demonstrates how staff training in effective EV management and driving techniques helped one organisation to ensure a successful fleet transition that maximised the benefits of their new technology while keeping staff engaged and informed.  
 
Assessing your organisations operations is another key strategy for successful delivery. The implementation of a technology, such as lighting and heating controls, may require you to be adaptable and receptive. This could mean adjusting your day-to-day operations to accommodate the implementation of a new technology. Ensure your organisation is prepared for the implementation of a new green asset, before, during, and after.  
 
With these steps, organisations will be ready to maximise the benefit of the green financing options available to them, select the right grants and loans, and ensure successful delivery and implementation. 
 
Now that you have overcome the finance barrier, explore the grants and funds available for your green project here.  

Access support to decarbonise your business, improve your competitiveness and save money.