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Turning SMEs into trailblazers

24/11/2011

  • United Kingdom
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Resource-efficiency experts are helping a select group of SMEs in the east of England to innovate, protect the environment, cut their costs and improve rural competitiveness.

“A local pub can save £3,200/yr and 13.6t CO2e using heat recovered from a cellar cooler to heat hot water. Total investment is only £3,000!” This tweet on the REV ACTIVE project Twitter website speaks its essence. The project’s goal is to help SMEs in the region of Norfolk better use resources to cut both costs and their environmental footprint.

The three-year project was launched last autumn by Breckland Council as a follow up to its multi-million pound Rural Enterprise Valley (REV) initiative, which over the three preceding years injected fresh dynamism into the region’s world class engineering and motorsport businesses.

Perhaps the strongest evidence of REV ACTIVE’s success to date is that communities in England’s North East and East Midlands are proposing similar programmes amounting to some £10 million (€11 million). The project is also on the lookout for EU partners.

Material productivity is becoming a key determinant of competitiveness: 75% of European companies experienced an increase in material costs over the last five years and 90% expect further increases, according to a 2011 Eurobarometer report. Many are looking to eco-innovation as the answer. German case studies reveal that companies have saved an average of €200,000 with investment costs of under €10,000 for nearly half of 700 manufacturing firms studied. In the UK, the resource efficiency savings opportunities for 2009 are estimated at £55bn. The potential is even greater for SMEs than large companies.

“Realistically, most financial and environmental benefits come from looking at the resource energy,” says project manager Simon Best. The European Regional Development Fund (ERDF), which co-finances REV ACTIVE, does so in an effort to drive low-carbon economic development.

Other aspects of business’ environmental footprint are not ignored: if REV ACTIVE believes it can deliver a 10 to 20% annual improvement in energy efficiency, it also believes it can get SMEs to use water 25% more efficiently.

Taking a proactive approach

REV ACTIVE distinguishes itself from other projects by its proactive approach. Rather than merely making lots of information or self-help tools available and leaving it to companies to take them up, it is directly approaching 400 SMEs, reviewing their resource use and guiding them through actions to improve it.

One such business is Warren Services, an engineering firm currently looking to save 50 tonnes of CO2 and £20 000 (€23 000) a year – with a payback period of just two years for the upfront investment. It is installing equipment to minimise electricity use, with voltage optimisers and LED lighting.

“Having a team of professionals look at the business from every aspect and identify significant savings in areas we hadn’t considered has been incredibly useful”, says managing director Richard Bridgman. The savings will come on top of many the company has already made, including recycling 95% of all waste.

Other companies are also already benefiting from REV ACTIVE’s support. Colchester Print for example is saving £7 200 (€8 200) a year after reducing waste to landfill by 70% and generating new income through paper recycling. Kitchen furniture maker Brian Turner Furniture is saving £6 000 (€6 800) a year by running a biomass wood-heating system fuelled by sawdust and other wood waste.

Businesses are being selected not just on the basis of broad ERDF criteria but also on REV ACTIVE‘s own, more detailed ones. These include an SME’s size, sector, location and even how much heat it currently wastes by means of thermo-imaging data.

The idea is to identify businesses with the greatest appetite and ability to invest in resource efficiency, as well as having room for improvement. Recommendations can include heating/lighting optimisation, better waste management and solar photovoltaic installations. REV ACTIVE presents each suggestion together with a cost analysis and provides a dedicated advisor over the course of the project’s three years. Advisors help assign responsibilities, set targets, monitor progress and access funds.

Partnership for funding

REV ACTIVE itself has a small pot of money to distribute as grants and has partnered with Lloyds TSB bank to facilitate access to loans to finance the proposed investments in resource efficiency. The bank uses REV ACTIVE’s reports to evaluate relevant business loan applications. It is not necessarily after short payback periods (the longer the duration of a loan, the more interest they can charge) but it needs to be confident that the business case is based upon sound scientific assumptions and is realistic.

Banks are very interested in investments that make their clients more resilient to rising energy costs, says Best. They’re under pressure from government and shareholders to both support low-carbon initiatives and lend more to small businesses to fuel growth. Lloyds TSB is now referring its clients to REV ACTIVE when they’ve expressed an interest in resource efficiency, renewables or low-carbon business.

So far, the project has offered £82 000 (€ 95 000) in small grants against a private sector contribution of £1.1m (€1.3m). This corresponds to the first 163 completed company reviews which have identified annual savings of £1.8m (€2.1m) and over 8 700 tonnes of carbon. About a fifth of the money has been spent. By the end of 2011, annual savings are expected to be over £370,000 (€430 000) and over 1.1m tonnes of CO2. REV ACTIVE estimates that 40-60% of private sector investment is probably funded by bank credit.

“REV ACTIVE has demonstrated that matching EU structural funds directly to private sector investment in business resource efficiency is viable,” says Best. “Private-sector appetite for investment in resource efficiency is higher than originally anticipated.” REV ACTIVE demands an absolute minimum of public-sector commitment at a time when this is anyway in increasingly short supply.

In addition to direct aid in securing funds, REV ACTIVE offers companies access to better purchasing deals for green technologies such as LED lighting. By teaming up with AF Affinity, the UK’s largest purchasing group, it can negotiate the lowest possible prices for thousands of environmental products and services.

Focus on low cost actions

REV ACTIVE helps SMEs make the most of what is already out there for them. The focus is on low-cost, fast pay-back actions, although it is working with a subset of businesses on longer term savings that include re-engineering processes, more sustainable procurement and product innovation. This typically involves bringing in specialist third party providers.

Best believes the project’s timing is perfect as government support dries up in the wake of the continuing economic crisis. “It offsets the significant reduction in local business support provision likely by the end of 2011,” he says. One aspect of the project that the current economic climate has made more difficult is job creation – more jobs have probably been retained than created. This is also because green job creation tends to occur where innovation and growth are stimulated in the low carbon environmental goods and services sector, says Best.

Yet despite the economic difficulties, or due to its value because of them, REV ACTIVE is alive and thriving.

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