'Green credentials' important for businesses
Article Date: Feb 06 2007Maurice Fitzpatrick, economist and tax expert at Grant Thornton, considers the hot topic of ‘green issues’ and measures likely to affect UK businesses in the coming years:
The total value of oil and gas consumed in the UK is £30 billion a year by my calculation, which is around 2.5 per cent of GDP. That’s a useful approximation to the carbon consumption of this country and a figure to keep an eye on as the UK tries to address its carbon footprint. All businesses and individuals contribute to that figure.
The Stern report, published in November and commissioned by the Government to look into green issues, proposed that it would be sensible for developed countries to discourage ‘bad energy behaviour’ by increasing green taxes to the equivalent of one per cent of GDP, which would raise around £12 billion a year in the UK.
We haven’t seen a full response to that report from the Treasury yet. The pre-budget report increased road fuel duty, though only in line with inflation so not in real terms. Only the other hand, the Chancellor doubled airport passenger duty, which will equate to an addition £1 billion and could be considered the first instalment of the £12 billion sought. So, I imagine there are likely to be more green taxes on the way this year and beyond, especially relating to flight taxes and road fund duties.
In addition to penalising bad behaviour, it would be logical for the Government to offer more fiscal sweeteners for good, green behaviour, such as tax breaks for low pollution vehicles or subsidies for environmentally friendly activity by both businesses and individuals.
Serious issues
Such measures will be designed to encourage all companies to take energy use more seriously, including those that have until now denied the scientific evidence or simply turned a blind eye to it. The tide is turning, particularly because climate change is going to present new business opportunities to be seized in the future.
Many companies are becoming more concerned about their ‘green credentials’, which we just wouldn’t have seen ten years ago. It’s starting to trickle down to smaller companies and it seems to me that will continue.
My impression is that the companies previously in denial about the scientific evidence are increasingly accepting that they can’t turn a blind eye to energy use anymore. There are money making opportunities out there in terms of green technology and disseminating good energy practice.
