Defra Study Shows Financial Benefits Of Green Businesses
25 November 2011
New evidence of the financial benefits of green business has been published today on the Defra website, with two thirds of businesses surveyed either having increased sales, or expected to do so since implementing an environmental management system
The study of 31 small and medium sized enterprises shows significant financial benefits to businesses of developing an accredited environmental management system in order to assess environmental impact and help use resources more efficiently.
The study shows most businesses reported an increase in sales as a result of their environmental management system recouped the costs of implementing the system within just one month.
Small and medium sized enterprises (SMEs) are a vital part of the local and national economy accounting for 99.9 percent of all enterprises in the UK, and providing 59.8 percent of all private sector jobs in 2009.
Businesses that invested the most in implementing an environmental management system made the biggest cost savings.
The study demonstrated the increasing importance of corporate responsibility in business:
for most businesses, commercial and marketing opportunities were found to be the biggest motivations for developing an environmental management system.
almost all businesses had received requests for information from customers about their environmental management system since implementing it.
Environment Minister Richard Benyon said: "All businesses should be planning green and growth together - thinking strategically about environmental management leads to more sales, bigger profits and a more attractive business to clients and investors.
"It's one of Defra's top priorities to build a strong and sustainable green economy that is resilient to climate change.With business, we are working to green and grow our entire economy, protecting our environment and creating new investment, technologies and opportunities for trade."
Key Findings
Commercial and marketing opportunities were by far the most important initial trigger for the SMEs' decision to adopt an EMS, suggesting that this is more important than cost savings in converting SMEs to the benefits of EMSs.
Certified EMSs delivered cost savings for the majority of the 31 SMEs, with an annual average saving over 2 years of £4,875 per £m turnover. The costs of certifying and implementing the EMS were calculated at £1,362 per £m turnover (annual average over 2 years), therefore suggesting a payback period of 3 months for the cost savings.
All but one of the SMEs in the study had received requests for information from customers about their EMS and over a half of the SMEs had in turn contacted their suppliers.
Just over a third of SMEs in the study felt they had achieved new business sales as a result of their certified EMS, quoting an average value of £14,961 per £m turnover in the year following certification.
The study's data also showed that 28 SMEs made an average cumulative saving in carbon dioxide equivalent (CO2e) of 38.9 tonnes per £m turnover per SME and that the carbon savings improved over time, with Year 2 figures up 59 percent on Year 1 figures,
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