Manufacturers are Managing Green and Growth

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Meeting the dual objectives of a green economy as well as a growing one continues to hit the headlines. Following our report, published six months ago, Green and Growth: Solutions for growing a green economy, CBI published its own take on the matter. It concurred with our analysis – there need not be a choice between green and growth - but having the right policy framework in place matters.

Today, we published our survey of our members examining their response to climate and environmental challenges. The results are clear: The government has yet to deliver the policy framework we need to deliver the vision of a green and growing economy.

UK manufacturers are among the most efficient in the world, at least according to recent surveys and analysis (See figure 2.3, 2.5). And they are striving to do more. Seven out of ten manufacturers have set environmental targets that are more ambitious then legislation in areas such as waste reduction, energy efficiency and water use. Manufacturers recognise that waste, be it resources and energy, represents money off the bottom line. They manage their impact because they recognise leaner, more efficient operations are also more competitive ones.

Ironically, manufacturers see legislation targeting climate and environmental impacts as holding them back. The burden of differing and competing reporting demands results in more paperwork and less innovation. And the associated cost continues to rise. Just a few weeks ago the government's own research showed that UK manufacturers in energy intensive sectors pay more in energy taxation and for climate change policy than anywhere else examined – and the situation is set to become even worse in future.

Our survey shows that this cost and the perception of red tape risks impacting on investment decisions. While the Red Tape Challenge is starting to make an impact in areas such as employment law, the Coalition Government has overlooked entirely the complex, costly and incoherent climate and environment landscape. We call on the government to carry out a comprehensive review ahead of the next Spending Review.

Just to be clear we absolutely agree with the objectives of this policy landscape but we think these objectives can be met in a better way which works with the grain of manufacturing. Our members agree. The survey shows this area is suffering from an image crisis and needs drastic overhaul and streamlining to create the right incentive to meet the challenge in the most efficient way possible. While we clearly need to meet the challenge of decarbonisation we need to also ensure that the UK is an attractive option for investment and internationally competitive. A more strategic approach is required.

To help we think that there absolutely needs to be a focus on affordable decarbonisation. We propose a new green and growth “stress test” – where all new and reviewed legislation is routinely assessed against these two objectives. If both objectives aren't met the legislation should not be passed. We think things should be made a little easier for environment managers – let's review the reporting schedule in its entirety and plan it better so that companies aren't overloaded at certain times of the year and work isn't duplicated.

Finally, while the direction of government policy and permitting requirements continues to push for more investment our survey shows that unsurprisingly access to finance continues to hamper the ability of manufacturers to implement new schemes and roll out new technology to improve their efficiency and cut waste, carbon and water use. We think there is a failure by government's energy and climate change department, as well as the environment department, to grasp the challenge this will pose for companies, particularly SMEs. While a Green Deal for SMEs is welcomed, we need a broader debate on innovative financing models to deliver long-term green objectives.

Author

Director of UK Steel

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