News Article - 24 May 2012
Category: Environment

Research by Carbon Trust Advisory (CTA) reveals that large UK businesses are undervaluing the financial returns from energy efficiency investments by up to £1.6bn.

Because of this larger firms are missing out on significant savings that could be made by taking simple measures such as upgrading lighting and heating, implementing energy-saving policies and training staff.

These findings were reported by the CTA in a recent paper, called 'The Business of Energy Efficiency'. The paper revealed positive facts about energy efficiency investment that will, the CTA hopes, encourage uptake amongst larger UK organisations.

On average, energy efficiency projects deliver an average ROI of 48 per cent, which is roughly four times the minimum commonly demanded by senior finance officers. Despite this, senior leaders estimate the average ROI to be below 20 per cent.

The CTA has identified three main reasons why big businesses are missing out on the benefits of energy efficiency investments:

• The relative newness of the low-carbon economy means that the investment case for energy efficiency projects is often unconvincing, making it harder to gain access to finance.
• Energy efficiency is often regarded as a low priority in many firms despite the clear potential for it to benefit the bottom line. Integrating energy efficiency into company culture is seen as too difficult.
• Misaligned incentives prevent significant uptake. The 'landlord-tenant divide,' for example, stops landlords from making their buildings more energy efficient because tenant companies gain the benefit, through lower energy bills.

In the post-recession climate manufacturers, and other UK firms, may be reluctant to spend money on improving their energy efficiency. However, the high potential ROI makes these investments good long-term options. As the Government continues to push businesses to contribute to the low-carbon economy, manufacturers could face reputational issues if they cannot make demonstrable investment.

Access carbon reporting software is an important tool for companies that wish to act; firms can track the results of energy efficiency measures, such as replacing light bulbs with more efficient variants, and break the results down by department. The most profitable measures can then be replicated to maximise benefit to the bottom line.

For more information, please call Access on 0845 345 3300.

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