Building sustainability into your next R&D project

Over the last twenty years, the focus of businesses in the UK has substantially shifted towards sustainability. Driven by concerns from scientists and climate experts around the long-term impact of human behaviour on the environment, sustainability initiatives began in earnest in the 21^st century with the founding of the Waste and Resources Action Programme (WRAP) in 2000, and the UK’s Climate Change Act 2008. Following this legislation, the UK Government plans to achieve a net zero economy by 2050. This will require businesses to adopt green practices to reduce their emissions. In this context, investments in R&D (research and development) and effective sustainability strategies will play a key role for businesses to meet sustainability targets.  

Adoption of Sustainability Strategies into UK Business

A survey conducted by global management consultants McKinsey & Company showed that “33% of businesses are integrating a sustainability strategy to improve operational efficiency and drive down costs”. Meanwhile, 57% of respondents said that their companies have integrated sustainability into strategic planning. 58% and 41% have done so within their operations and supply chain management respectively.

While this is a positive start, and a step in the right direction towards achieving the UK Government’s targets, there are still many businesses who have yet to take action. This lack of action comes from various barriers such as insufficient resources, insufficient staffing, a need for organisational restructure, and company leadership not setting sustainability as a priority.

At Sustainit we know how daunting it can be – especially with little knowledge, and resource – to implement a meaningful sustainability strategy. We aren’t surprised at these stats but feel that the landscape is changing at a rapid rate with tighter regulations and an increase in stakeholder sustainability awareness. Most businesses will soon fall behind if they fail to embed sustainability into their long-term plans – Amber Rochette, Sustainability Consultant.

Creating a Sustainability Strategy

Creating a sustainability strategy is a great place to start for businesses who are unsure of how to implement sustainable practices. When creating a sustainability strategy, it’s important to start by establishing goals for the business. Some business leaders may find it useful to establish goals for both the business and individual departments.

To aid in the strive for sustainability, business leaders should create a board of personnel who are responsible for managing initiatives and activities, therefore making the business’s goals easier to track. Once goals are established, businesses should create a realistic framework for achieving them, including an overall target to work towards.

Businesses should include check points at regular intervals and identify clear key performance indicators (KPIs) that can be reviewed at each checkpoint. This will allow for adjustments in strategy where required. Once the foundations of a business’s sustainability strategy are established, it can be built up to better suit the business. It is then the role of the board personnel to ensure each business department adopts any new strategies.

Sustainit Top Tips for developing a sustainability strategy:

• Embed your strategy throughout the business. Sustainability should not sit exclusively with senior leadership teams, or sustainability managers. Take steps to ensure that your entire workforce is engaged, or at the very least understands the business’ approach to sustainability.
• Set realistic and measurable KPIs. Building a sustainability strategy can often feel overwhelming, especially with a lack of immediate tangible outputs. Try and move away from this thinking by setting lots of small milestones, that will help you get to your end goal. And, celebrate every win!
• Ensure that your strategy is built on insightful data. Invest time in understanding where you have the most impact, whether that is measuring your carbon footprint, mapping your supply chain or getting client feedback. Gathering data will help you to build a strategy that provides the most beneficial outputs for your business.

How R&D can help businesses honour their Sustainability Strategy

Many businesses, particularly those operating in sectors that produce high levels of carbon emissions, are substantially investing in R&D in an attempt to develop more environmentally sustainable processes, tackle their emissions, and make their operations greener.

In many cases, projects aiming to develop new processes or integrate new technologies into existing ones could be eligible for R&D tax relief. The scope of the relief extends further and could also apply to projects seeking to develop products with enhanced attributes such as durability, sustainability, and overall performance, or iterate existing ones by improving certain characteristics. The benefit that could be awarded to businesses carrying out eligible R&D projects would offer substantial funds to support their sustainability strategies and further investments in innovation.

A brief overview of R&D schemes

The R&D tax relief was created by the government as an incentive for businesses to invest in innovation and stimulate the growth of the UK’s economy. Run by HMRC since 2000, the relief rewards companies who invest time and money into developing new, or improving existing, products, processes, or services.

There are two incentives available:

• The SME R&D tax credit incentive – for small and medium enterprises.
• The Research and Development Expenditure Credit (RDEC) – for large companies or SMEs which receive grant funding.

Both incentives can broadly cover costs across four categories: staff, software, consumables and third parties (people who you pay to carry out R&D on your behalf that are not on your payroll).

Summary

One-third of businesses in the UK are implementing sustainability strategies, while 47% of small businesses surveyed by British Business Bank are adapting production to reduce their environmental impact.

Are you ready to join them? With the opportunity to benefit from HMRC’s R&D tax relief, and support readily available from funding experts Apogee, the implementation of R&D within your business to compliment a sustainability strategy is a no-brainer.