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FUNDING
IN ASSOCIATION WITH:
GREEN IS FOR GO
The power surge in investment in businesses with strong Environmental Social and Governance (ESG) credentials shows no sign of weakening.
With sustainability and the Net Zero agenda becoming increasingly important when it comes to doing business, green finance is also on the rise.
A recent survey of Northern Powerhouse Investment Fund investee businesses revealed nearly a third had used the cash received to reduce their environmental impact.
Three quarters of them had used the finance to improve their environmental practices, with half adopting low carbon technologies and 20 per cent having developed net zero plans.
They include innovative businesses like Skelmersdale based Extreme Low Energy (ELe). The manufacturer of connected electrical solutions received a £750,000 investment from NPIF – Maven Equity Finance, helping it to pioneer a new low-power product.
Its Eco Off-Grid Leisure Kit was created help meet the surge in demand for staycations over the last year.
Sue Barnard of the British Business Bank says: “Green finance has developed over the years. Historically, funds were set up specifically to serve green or ‘impact’ investments however, it is much more commonplace today that any given investment will have some sort of green element.
“Whether it is funding directly for a business working to plug a gap in the sustainability market, or one that is seeking investment to progress its own ESG initiatives, the demand is there and it’s growing.”
Sue Barnard
Jill Morris, partner at Lancashire headquartered business advisory and accountancy practice PM+M, says it is important that businesses realise they don’t have to operate in the green sector to benefit.
She says: “It may be funding for carbon reducing technology or a green project you are looking to set up in a different part of the business. When it comes to sustainability there is wide criteria.”
She adds: “This growth is enhanced by the collective efforts of businesses, alongside ambitious green investment plans from combined authorities, Local Enterprise Partnerships, Growth Hubs and other stakeholders in the region.”
Sue points out that across Lancashire’s northern border, Cumbria has launched its own green investment plan, “looking to identify and develop transformative opportunities to create sustainable prosperity”.
In some cases, there may be better rates on offer, it depends on the lender and the business.
Jill says it makes sense for businesses to consider all the options available and look to see if the project or investment they are looking to fund has a green angle. “You may be able to use that fact to grow and take the business to the next level,” she adds.
High Street lenders are also joining the sustainability surge. HSBC UK has launched a £500m ‘Green SME Fund’ as part of its commitment to support businesses of all sizes to “transition and thrive” in a low carbon economy.
The fund is available for businesses with a turnover of less than £25m, offering one per cent cashback on loans, starting from £1,000 to help SMEs invest in green activities.
Launching the fund at COP26 last November, chief executive Ian Stuart, said: “Companies of all sizes and sectors have a role to play in the journey to net zero, however the sustainable finance market has been predominately focused on larger corporations.
“It’s critical that access to funds isn’t a barrier for small and medium sized businesses working to achieve lower carbon emissions.”
NatWest has now launched its green loans and asset finance propositions, with no arrangement fees for qualifying SMEs investing in eligible clean buildings, energy, transport and agriculture.
The bank had earlier announced its ambition to provide £100bn of climate and sustainable funding and financing to customers by the end of 2025.
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