“Three years ago we pledged to become more environmentally friendly in response to Peterborough becoming an Environment City Trust” says Shaz Nawaz, managing director of AA Accountants, a small business with five employees. Nawaz has led the company on a green accreditation journey to become an ‘Investor in the Environment’. One part of the process involved becoming more energy efficient, and to help with that, a smart meter was installed, showing in near real time how much gas and electricity was being consumed.
For an SME attempting to go green and save money, Nawaz believes advice and encouragement are critical to long term success – which is where working with an accreditation body can help. “What the assessors do is help you draw up an action plan that looks at the small things you can start off with,” he explains. “It’s baby steps: the first month, they ask if you can save two percent on your energy use; the next month you try for another two percent. By now, it’s become established behaviour change.”
As a result of observing energy being gobbled up at times when the building was minimally used, lights and heating are now programmed on a timer, Nawaz explains. “Heating used to come on and stay on all day - we’re a small company and people are very busy, so it’s easy to forget to turn it off.” Now, the heating switches on in the early morning when energy is off-peak, which saves money. Because the building is new and well insulated, the offices stay warm until mid-afternoon.
Responding to what the smart meter was telling them has saved AA Accountants eight percent on its energy bills. This has been achieved by a combination of measures: sensors in the toilets, the heating timer, and encouraging employees to be more thoughtful about simple daily habits, such as only turning on the strip of lights above their own desk if they come in early, rather than flipping all the switches to illuminate the entire floor.
Money spent on green measures has been minimal for this business, but for SMEs seeking to make bigger savings, the return on any substantial investment is critical, says Theodore Clarke, operations manager at Gateshead-based Green Energy Consulting. Ninety percent of his clients have made the switch to 100 percent renewable or carbon neutral gas, and “a fast payback is important to them - anything under five years is ideal,” he explains.
Installing a biomass boiler, for instance, will cost between £20,000 and £100,000 depending on its size: despite the capital cost, this is exactly what Manchester-based toiletries company Faith in Nature opted to do in a bid to reduce reliance on fossil fuels.
“We need heated water to make some of our products,” explains head of marketing Helen Keely. “We’d previously used electric heaters; this draws power from the national grid and is energy intensive.” The new biomass boiler – a substantial upfront investment – was installed a year ago and uses pellets from sustainable forests. It has already saved Faith in Nature £25,000 in energy costs: the payback time is four years.
Saving money by going green is not however just a simple matter of coughing up for shiny new kit, Keely observes.
“From the initial thought of whether we could use a biomass boiler to getting the equipment installed took around six months. During this time an assessment was made to determine if a biomass boiler was right for our business and what estimated pay back we could expect, as well as deciding on the right location in the factory for the boiler,” she explains. “It had to be somewhere accessible so that the pellets can be fed in.” A range of suppliers then had to be contacted to work out who could provide the right boiler for the business’s needs. Importantly, once bought, the boiler’s installation was scheduled for an already-planned reconfiguration of the factory, so did not require any downtime on production.
Focusing solely on big energy bills means that a business may not see the whole picture on where money can be saved, advises Mark Hilton, resource efficiency lead at environmental consultants Eunomia: there can be other significant areas where greening a company’s processes can cut costs.
“In many sectors the biggest savings are related to the ‘hidden’ costs of wastage,” he explains.
While waste disposal costs – and water supply and wastewater discharge costs – are generally small, Hilton says the true cost of wasting materials can be up to 20 times the more clear-cut price of disposing of them – a sum that is frequently larger than the energy bill.
“Food waste, for example, typically costs only a little over £100 per tonne to send to landfill (significantly less when recycling it), but the true value of the food is generally worth upwards of £2000 per tonne in raw material and added value terms,” he says. “This includes the cost of the wasted ingredients that went into the food, and the energy, water and labour costs associated with storing, making and serving the food that is then wasted. Putting the spotlight on this often changes a business’ mind-set – allowing greater focus on process efficiency and reducing wastage at source.”
Hilton observes that SMEs, which are often time and cash poor, and tightly focused on their core business of getting stuff out of the door, “need a business case to act but have no time [or] know-how to gather the data to make the business case.”
This is why public sector-funded support is invaluable, he says, to encourage greener attitudes and practices. Free or subsidised advice can however be in short supply, so many start-ups in particular take their initial steps to being more sustainable on their own.
New restaurant Eat Native in London’s Neal’s Yard uses natural, seasonal and foraged ingredients, and has a focus on living and eating sustainably. The imperative to keep costs down while adhering to the co-founders’ determination to be low-impact has directed them towards a new technology that allows the business to operate an almost entirely paperless bookings and receipts system.
Buying two printers, ink, paper and an ethernet connection to the restaurant kitchen would have cost £700, explains co-founder Imogen Davis: when every penny counted in the run up to launch, this was an upfront investment the budding restaurateurs would have been hard pushed to find.
But diners need bills, and business customers in particular require receipts: the solution has been a £40 monthly subscription to a piece of software that means paper receipts are a thing of the past. “Bills are viewed on an iPad, then we take an email address, press a button, the receipt arrives in your inbox, and customers check it on their phone,” Davis explains. “Technology has changed so much: the system is user friendly and all our waiting staff pick it up in one shift.”
Has anyone asked for a written receipt?
“Not yet!” she laughs. “Mostly customers seem to like it.”
As this start-up grows, it may find its cashflow could benefit from a more thorough consideration of sourcing and processes: the two restaurateurs’ green intentions having already paid off however, means the additional financial benefits of becoming an ever greener business may well be a powerful motivation to continue the journey they’ve started.
Content on this page is paid for and produced to a brief agreed with Smart Energy GB, sponsor of the Managing Your Cashflow hub on the Guardian Small Business Network.
