Lombard’s commitment to climate change has funded a number of energy-efficient assets. Director Leah Waterhouse highlighted combined heat and power (CHP) systems, which might incorporate biomass boilers, but advised businesses to do their homework to make sure different technologies worked together. “An EPC [engineering, procurement and construction] contract is good for bringing everything together, and not just for practical purposes. It can help with funding opportunities if we know someone is looking at your whole project holistically.”
Shore up your cash flow
Some areas of financing, particularly for larger projects, are reliant on future cash flows, said Waterhouse: “That might be what a project will deliver over five to 10 years in energy revenue.” For example, financers could fund a green technology that creates sufficient excess energy for a business to sell it back to the National Grid or through a power purchase agreement (PPA). “If we have a reliable customer with a PPA with a good offtaker, we could hope to try and find a finance solution, if there’s a ‘hell or high water’ contract for these cash flows.”
But that cash flow doesn’t need to be generated directly by the power source itself, Waterhouse added. “For example, if you want to put electric-vehicle infrastructure in your car parks, you won’t know how often people will charge, which gives you uncertain cash flow. So, we could look at putting in a related future cash flow that could be certain, for example advertising, and provide financing on the back of that. The renewable project doesn’t need to directly generate that cash flow for us to finance it. Try to be innovative.”
What businesses can do now
The panel suggested a series of actions that even the smallest businesses can take to start their net-zero journey.
Map your current emissions: “You might be surprised where you’re using your energy – it may be in a different area from what you assume,” said Waterhouse. “Perhaps you could switch some processes to the middle of the night when energy is cheaper. Use a carbon calculator tool to map emissions and learn where you can cut carbon.”
Review goals quarterly: “Break your goals down into manageable targets,” advised Waterhouse. “Management buy-in, and regularly reinforcing and reviewing a project, will help overcome challenges and find solutions.”
Build in future legislation: Consider upcoming legislation and how to build that into your plans. Any investment you make needs to be consistent now and in the future.
Make easy changes: “There are many simple things you can do now,” said Waterhouse. “LED lighting is easy, but a huge range of SMEs still have not taken those simple steps.”
How sustainable are your assets, really? “A lot of businesses have been using the same asset for 20 years and are proud to have maintained it,” said Waterhouse. “That’s a great use of an original resource, but it’s not necessarily the most efficient – it could be a diesel-powered structure! It could be more efficient to replace it with a new technology, and the payback may be sooner than you think.”
Collaborate to generate a circular economy: “It’s important to work with your supply chain,” said Sheppard. “You might not be sure how to decarbonise on your own but your actions balancing with a partner up or down the supply chain may be the answer. This commitment needs to be at every part of the supply chain to fully realise net zero.”
Take that first step: “We all need to move on this,” said Waterhouse. “Do your research on current emissions, work out what you need to change, how you can work with others – and involve your finance provider as early as possible. The earlier we come into the process, the earlier we can spot and solve issues that may be more difficult to change later on.
“But you don’t need the perfect answer from day one,” Waterhouse added. “The important thing is to begin the journey.”