Posted: Tue 3rd Nov 2020
The government should offer significantly more incentives to environmentally friendly entrepreneurs, says a new report that challenges the old assumption that pursuing sustainability is a hindrance to business.
According to the Green Entrepreneurship study commissioned by the Entrepreneurs Network and the Enterprise Trust, over three-fifths of business owners think that the shift to a greener economy presents positive business opportunities for entrepreneurs.
Founders believe that customers and employees are increasingly seeking out green businesses, the study found, with half saying customers expect them to be taking steps to be more environmentally responsible and 57% believing staff want to work for firms doing their bit for the planet.
SMEs are acting on this demand: 54% said they have carried out measures to become more environmentally friendly over the past few years.
But it's not just the pressure of consumers and employees that will be sufficient to meet major environmental challenges. The report argues that environmental problems are driven by market failures, where governments have not sufficiently made polluters bear responsibility for the full costs of their actions, nor sufficiently rewarded those who develop solutions to environmental challenges.
In the week that the UK should have been hosting UN climate change conference COP26, 30% of companies told the survey by Opinium that the government is doing badly when it comes to helping them to profit by addressing environmental problems.
Increase in funding for green entrepreneurs
The desire of businesses to embrace the green economy is there though. Data from Beauhurst shows that between 2015 and 2019 equity investment in start-ups described as 'sustainable' more than trebled, while 'environmental' businesses saw a 94% increase in equity raised.
One booming sector is urban farming which has seen a 540% increase in equity investments in start-ups over the past five years. Alex Fisher, founder of Saturn Bioponics, is one of them. His business grows food vertically in 3D hydroponic towers meaning that farmers need only one-third of the space they would have required for traditional farming for certain crops, while cutting down on water usage at the same time. The company has seen strong sales in the UK and overseas and forged partnerships with multi-nationals.
Fisher said: "Environmental entrepreneurship is undeniably extremely challenging - working to deliver solutions that are commercially attractive whilst simultaneously environmentally beneficial is not for the faint-hearted! However, it is incredibly rewarding and projects such as Green Entrepreneurship that highlight its importance for both our economy and society are of great value."
Another entrepreneur at the forefront of the greener economy is Too Good To Go co-founder Jamie Crummie whose business works with restaurants, cafes, and retailers to reduce food waste by selling left over products at a discount rate via an app.
In the UK alone, almost £20bn worth of food is wasted each year. That's around eight times the amount of the annual police budget. Too Good To Go helps 40,000 businesses across Europe to reduce their food wastage at scale.
Crummie said: "If we look at France, they introduced legislation in 2015, around retailers over 500 square metres having to redistribute food surplus. That has been a huge enabler because people are actively seeking food waste solutions."
The report makes 20 recommendations for the government to offer incentives for entrepreneurs to create green products and for consumers to switch from polluting or unsustainable products whilst boosting the economy.
The recommendations include:
Make the Annual Investment Allowance unlimited to encourage businesses to invest in as environmentally efficient equipment as possible.
Fix Energy Performance Certificates (EPCs) so they don't discourage consumers switching to Heat Pumps.
Use COP26, which the UK is hosting in 2021, as a chance to showcase British entrepreneurial talent in environmental innovation.
Liberalise drone and genetic editing regulations to make it easier for farmers to take advantage of technology.
Reform the Bus Services Operator Grant so cleaner fuels such as hydrogen are not penalised.
Eamonn Ives, author of the report, said: "If Britain truly wants to 'build back better', it cannot ignore the vital role that environmental entrepreneurs will have to play. Only by developing new products and ways of doing things can the economy bounce back, in a way which doesn't harm the planet.
"To promote markets in sustainability, the government must start both properly rewarding innovators, while clamping down on pollution and other forms of environmental degradation. Doing so would incentivise entrepreneurial activity in green solutions, and give British entrepreneurs a head start in the global race to succeed in the growth sectors of tomorrow."
Helen Booth, chief executive officer of the Enterprise Trust, added: "This report demonstrates unequivocally the critical role British entrepreneurs play in reducing our impact on the environment every day. The government should be unrelenting in trying to harness the ingenuity of the UK's environmentally-minded entrepreneurial community.
"The reality is, that it is only through the development of newer and better technologies that society will be able to overcome these pressing problems."