Kirkpatrick & Hopes - Succession Planning Accountants

Call us on: 0118 923 5800
Email us:

Save money or be green? By Graham Muse, Commercial Manager, Lloyds TSB Commercial

Graham Muse, Commercial Manager

Graham Muse, Commercial Manager, Lloyds TSB Commercial, Reading

“Sustainability and economics are one and the same” seems a pretty daft statement to make.

I’d like to start to explain by saying a big thank you to all those car drivers, particularly on the M4 in the mornings and evenings, who have taken positive action to be more environmentally friendly.

Nobody makes a fuss, but I have never seen such mass support before. It’s exceptional. Everyone has decided to drive more slowly to conserve fuel, one of our world’s precious resources. Some have even forsaken their warm and convenient bubble of a car to wait on chilly platforms to take the train – the real troopers standing all the way into London.

Did they all get together in a muddy field full of tents to come up with this strategy? Or chain themselves to trees demanding to be allowed to drive more slowly? Or do they join the camp outside St Paul’s each day? Although I haven’t done a scientific study, I somehow doubt it.

No, they’re like you and me. Behaviours have changed because of economics, namely the fundamental relationship between Price, Supply and Demand.

Oil is a finite resource. Supply is restricted. Demand across the world is increasing as the economies of emerging nations, most notably Brazil, Russia, India and China, surge forward. The result is that prices increase. Drivers are now at the stage where the price of fuel hurts and so they are reducing their demand by driving more slowly or not at all. The fact that it helps our sustainability targets and reduces CO2 emissions isn’t the aim, but they’re great by-products.

Another example is the proliferation of solar panels on roofs. For some, the driver is to support sustainable power production. For most, it’s economics that have driven their change in behaviour, not a higher ulterior motive, although they are undoubtedly proud of their new green credentials. They can reduce their energy bills – the price they pay for their electricity – and there is income from the feed in tariffs, where surplus power is sold back to the National Grid (although the rate for these payments has just been halved by the government). For the companies producing and selling the solar panels, it’s economics. For the companies providing and fitting the solar panels for ‘free’, it is economics, as they benefit from the surplus sold to the National Grid.

In the UK we are committed to an 80% reduction in our carbon emissions through the Carbon Reduction Act. The government can try and persuade us all to make changes and become greener and more sustainable, or it can use economics. It has at its disposal carrots and sticks. It can penalise us to force behaviour changes, e.g. fuel duty. Or it can incentivise us, e.g. feed in tariffs.

Next time you change your behaviour, stop and think. You could very well be changing for a financial reason, but the reason behind it could actually be sustainability.

“Sustainability and economics being one and the same” doesn’t sound quite so daft now, does it?

Please leave a comment, or email me with any thoughts or ideas you have on this topic. I look forward to hearing from you.

Leave a Reply