Greening your business and saving you money

It’s impossible to run a business – any business – without leaving some sort of imprint on the environment.

All companies consume energy, buy in raw materials and create waste that has to be disposed of. The price we pay for a buoyant and growing economy is a degree of environmental degradation.

But that’s not to say businesses can’t take action to reduce the impact their commercial activity has on the planet. Indeed, as our political leaders queue up to be photographed beside melting icecaps or taking delivery of spanking, new, energy-efficient ministerial cars, the word from Whitehall is that the business community should be doing its part to ensure that the Earth’s resources are used in a responsible and sustainable way.

In part, this has manifested itself in a welter of red tape and regulation, such as the WEEE (Waste Electrical and Electronic Equipment) Directive and RoHS (Restriction of Hazardous Substances) legislation, for example. But there is also a positive message coming from government and its various agencies – going green is good for your bottom line. There are some obvious points to be made here. Use energy effi ciently and your gas and power bills fall. Create less waste and you not only cut down on raw materials spending but also reduce any landfi ll charge that you have to pay. In other words, taking a responsible approach to environmental issues is not only a good thing to do from a moral and ethical perspective, it also makes sound business sense.

CUTTING OUT WASTE

Waste typically costs 4% of turnover, which could well be the difference between profi t and loss or just profi t and increased profi t. That has certainly been the experience of Devon-based potato crisp manufacturer Burts Chips. Although the company is still relatively small – it currently has around 50 employees on its books – it has carved out a niche supplying crisps to retailers such as Waitrose and Harrods. Demand has grown rapidly, and the company will soon be moving from its current premises (6,000 sq ft) to an outlet with almost six times the fl oor space.

But the business has had a problem. The production process has generated large amounts of waste, with too many potatoes and crisps being thrown away. According to technical manager Rebecca Woodward, this meant the business was labouring under the double whammy of unnecessarily high raw materials and waste disposal costs. Action was necessary.

“In any growing business, ready cash tends to get used up as soon as it appears, so we needed to address the problem,” says Woodward. “We recognised that by reducing the waste we could save money and we could also reduce our impact on the environment.”

Burt Chips’ solutions were both procedural and technical. On the former front, better training on quality control meant that fewer chips – indeed an impressive 90% fewer – were thrown away during the production process.

In the meantime, the company also invested in equipment that would apply seasoning to its products more evenly, reducing waste on that front too. “The seasoning is the most expensive ingredient,” explains Woodward.

The result of all this has been a £21,000 annual saving on raw materials and waste disposal. Now the company intends to continue with a policy of improving effi ciency while lessening its environmental impact when it moves into its new factory. “In designing the new plant, we have included a more effi cient heat exchange system to cut down on power usage,” says Woodward. “We are also introducing a sorting machine that will further cut down waste.”

GOING GREEN FOR FINANCIAL PAYBACK

Arguably, the steps taken by Burts Chips simply represent good management that also happen to have a positive impact on the environment, almost as a by-product. But the company’s experience does illustrate the point made by government and environmental campaigners that a great deal of the measures that can be taken to ‘green’ a company will provide a fi nancial payback.

And if you get the basics right, your business can save money for virtually no upfront spending. As Dr Garry Felgate, a director of government-sponsored energy efficiency advisory service the Carbon Trust points out, there are many low-cost measures that companies can use to reduce their energy bills – and reduce carbon emissions into the atmosphere.

These include using low-energy light bulbs, only lighting and heating parts of the building that are actively being used and turning off electronic equipment overnight and at lunchtime. “You can even take out light bulbs,” he says. “At the Carbon Trust offi ces, our lights are arranged in banks of four. By taking out two bulbs from each bank, you can cut the lighting bill by half.”

These simple conservation measures don’t have to be confi ned to power consumption. Envirowise, another state-funded organisation, provides consultancy services to businesses on a broader range of green issues.

Director Mary Leonard says that just as you can make inroads into light and heating bills by tightening up on usage, you can also cut down on water and raw materials costs. “There are lots of things you can do,” she says. “From recycling envelopes through to fixing leaks and taking steps to cut down on the water used when lavatories are flushed.”

Thinking carefully about transport issues can also save cash. If your company runs a fl eet of cars, replacing them with more fuel-effi cient models when the present contract hire period comes to an end will save you money on petrol. Research by business-focused fi nancial adviser Bibby Financial Services suggests that many company buyers have already taken this on board. In a survey of entrepreneurs, Bibby found that 59% of businesses take the knock-on effect on the environ- ment into account when making purchases, with features such as fuel effi ciency becoming more important than status and performance.

THE CASE FOR INVESTMENT