Can UK Business Afford a Low Carbon Economy?

British business wants to invest in low-emission equipment, but limited product range and financing options coupled with too few tax breaks, stand in the way

One in four UK companies now measures its carbon footprint, and two fifths of British firms have implemented carbon emission reduction initiatives. However, many are being held back from investing further in low-emission equipment due to the uneven application of tax breaks, issues of affordability and lack of product choice. These are the key findings of a research report into UK companies’ environmental attitudes and their investment in low-emission technology and equipment, commissioned by Siemens Financial Services.

The report calls for greater incentives to invest in environmentally-friendly equipment; including a move towards more consistent application of capital allowances from specific technology categories (such as vehicles) to the inclusion of all equipment categories meeting defined low-emission standards.

Equipment manufacturers are also encouraged to extend their ”green” product ranges; and vendors are encouraged to make equipment finance more easily available, so that upgrading to more environmentally-friendly equipment does not mean the buyer has to absorb a major (and often unaffordable) capital outlay.

Commenting on the report, Rod Tonna-Barthet, Director, Siemens Financial Services, explains, “This independently conducted research amongst British businesses provides a really encouraging picture, but also reveals some serious barriers to a significant increase in low-emission equipment investment. Not only do financing tools need to be more easily available for buyers to spread payments over a period of years; but the Government also needs to iron out the anomalies over how tax treatment, in the form of capital allowances, is applied. UK businesses want to invest in greener infrastructure, but there must be a clear business case for doing so. Whether these barriers are removed, through the joint efforts of equipment manufacturers, vendors, financiers and Government, will have a massive impact on the greening of British business, and consequently helping to create a better environment for everyone.”

Commenting on the Siemens report, Penny Shepherd MBE, Chief Executive, UK Social Investment Forum (UKSIF), adds, “To me, this report contains much good news. It is impressive that over a quarter of firms are measuring their carbon footprint – a few years ago, the percentage would have been vanishingly small. Similarly, it is a good start that more than two in every five firms have implemented carbon emission reduction rules.

“Of course, the future of our economy, our children and our communities demands that these percentages grow and that monitoring is backed up by increases in practical action – particularly the move to ever more efficient equipment. Earlier this year, the UK Social Investment Forum (UKSIF), with the assistance of the Carbon Trust, the Finance and Leasing Association and leading asset finance companies, produced the report ‘Green Opportunity: Accelerating the Financing of Low Carbon Assets’. That highlighted the key role of asset finance in enabling British businesses to invest in low carbon business equipment.”