Why manufacturers should embrace a net zero strategy
It is common knowledge that the UK Government has created a legally binding target of net zero greenhouse gas emissions by 2050 – at the time of writing, this gives the UK the best part of 27 years to achieve that goal.
27 years feels like a long time – for context, 27 years ago (1996) saw our penalty shoot-out heartbreak in the semi-final of Euro 96, the average UK house price was approximately £50,000 and only 1 in 6 households possessed a mobile phone.
So what’s the rush?
The clock is ticking
The initial government plan contained myriad specific targets which were deemed necessary to meet for Net Zero to be achieved in 2050, Prime Minister Rishi Sunak’s speech of 20th September delayed some of these targets.
Numerous independent bodies have warned that without swifter action the target cannot be accomplished. And the meteorological events of this Summer across the world have shown us that the climate isn’t going to wait for us.
Accordingly, many entities and individuals have taken it upon themselves to act faster – at MHA Moore and Smalley we have published our commitment to becoming a Net Zero organisation by 2030.
How does the manufacturing sector fit into this?
The energy and emissions-intensive nature of much of the manufacturing industry means it is no surprise that changes in this sector will have a huge influence on whether or not the overarching target is met – a recent BBC website article noted that industry was responsible for 14% of UK emissions.
Why else should a Net Zero strategy be considered for manufacturers?
The benefits of joining the journey to Net Zero are not limited to positive environmental impact – investment in more efficient plant for example will reduce energy consumption costs and could reduce waste, whilst the impact on your business and brand can be significant – potentially making your business more attractive to new recruits and potential customers.
However, change can be initially expensive. That is where green finance comes in.
What is green finance?
Typically, green finance would be a loan or asset finance provided to support investment or activity that can be demonstrated to the provider to be beneficial to the environment, in turn progressing the recipient in their journey towards a greener future.
Application of such funds may be for equipment that can be shown to assist in meeting sustainability goals, electric vehicles, solar panels, generation of energy from waste, energy storage, LED lighting, green buildings and many others.
How can it be accessed?
A simple internet search will demonstrate wide availability of such finance from a wide range of lenders, and as ever, eligibility criteria will apply.
Your banking relationship manager should be knowledgeable as to the options available to you, and naturally, your usual MHA Moore & Smalley contact will be delighted to assist you.
What other support is available?
The term can also encompass Government grants. Recently the Government have released a ‘Find a Grant’ tool, a listing of all currently available Government grants, with filters and keyword searches embedded to direct the user to applicable support.
Eligibility will depend on location, sector and quantum of requirement amongst other factors. Often, receipt of grant finance will place a requirement upon the recipient to provide an independent accountant’s report regarding the application of monies received – we can assist with this.
Disappointingly, at present, there are few tax reliefs on eco/green expenditure compared to previous years. However, manufacturing businesses investing in new machinery and equipment can currently take advantage of very generous reliefs on capital expenditure with the unlimited Full Expensing rules available on qualifying plant & machinery expenditure, and the 100% Annual Investment Allowance available on a wider range of expenditure including electrics, lighting, hot & cold water systems and solar panels.
Even expenditure on building work which in the past would usually not have qualified for any reliefs can now benefit from the Structures & Buildings allowances which were introduced in the last few years.
How can MHA help you?
Whatever your capital expenditure, our capital allowances experts will work with you to ensure you get the best possible tax relief on the work undertaken.