As sustainability becomes an increasingly critical societal concern, we want to have our broker-network industry recognise the importance of environmental, social and governance (ESG) principles in their operations. Harnessing the power of ESG in brokerage services for commercial and asset finance can yield numerous advantages for you as a broker and for your customers. As the United Kingdom continues to move towards its net zero goal for 2050, asset finance brokerages need to understand the benefits and considerations associated with promoting and handling green finance for their customers. In this article, we explore the importance of green finance, its impact on the brokerage industry and how our established network of finance brokers can assist in navigating this promising market.

Why is Green Finance Good for Brokerages to Promote and Handle for their Customers?

Promoting and handling green finance can offer numerous advantages for brokerages and their customers alike. Firstly, aligning with sustainable financing solutions demonstrates your commitment to corporate social responsibility, enhancing your reputation as an environmentally-conscious business. By incorporating green finance into your offerings, you provide your customers with access to innovative funding options that support their eco-friendly initiatives, enabling them to invest in sustainable assets with ease.

Considerations to Take when Utilising Green Finance in your Asset Finance Brokerage

When incorporating green finance into your asset finance brokerage, it is essential to consider certain factors. Striving for transparency and thorough due diligence during the selection of lenders and evaluating their track record in deploying funds towards green initiatives. Additionally, assessing the financial viability and sustainability of green projects ensures optimal results for both stakeholders.

Incentives for You and Your Customers in Investing/Using Green Asset Finance

The United Kingdom government are recognising the need to accelerate the transition to a greener economy. They have introduced several incentives to drive the adoption of green asset finance. These incentives include tax breaks, grants and funding support for green projects. By engaging in green finance, you and your customers can not only contribute towards environmental preservation but also take advantage of the financial benefits and rewards offered by these incentives.

In a significant move towards sustainability, 85% of small businesses in the UK plan to invest in various eco-friendly initiatives in 2024, reveals a survey by Novuna Business Finance. The NACFB Patron’s survey, which involved 1,000 small business leaders, indicates energy efficiency as the top priority, with a third investing in solar or renewable energy, and others focusing on improving insulation and heating systems. About 28% are considering switching to electric vehicles, with 25% planning to install charging points. A noteworthy 22% intend to appoint a head of sustainability, demonstrating a strategic approach to eco-friendly practices. Additionally, over a quarter are investing in sustainable equipment and machinery, notably in the media, agriculture, manufacturing, and IT sectors. Novuna’s Joanna Morris highlighted the pragmatic approach of these businesses, adding: “Last year presented many small businesses with a challenging economic context, but despite this our study suggests many business owners are prioritising sustainability for 2024. It makes business sense but also it is the right thing to do.”
Novuna Business Finance, Press Release

Personal Actions to Becoming Eco and Green in Your Brokerage

To be truly eco-friendly in your business operations and asset finance brokerage, consider applying sustainable practices within your business. This can include reducing paper usage, opting for digital solutions, encouraging remote working to minimise carbon footprints and promoting recycling and energy efficiency measures. Taking these steps not only showcases your commitment to the environment but also serves as a testament to your clients that you walk the talk.

Availability of Green Lending

The availability of green lending in the United Kingdom is rapidly increasing due to the growing demand for sustainable financing options. According to data reports compiled by the EIRIS Foundation, UK green and ethical funds has grown significantly in 2020 to an estimated £33.5 billion. This trend highlights both the opportunity and necessity for brokers to tap into the expanding market of green finance.

Asset Types in Green Finance

Green finance encompasses a wide range of asset types, including renewable energy projects, energy-efficient buildings, electric vehicles and sustainable agriculture. The diverse options available in the green asset finance space allow for tailored solutions to fit the unique environmental goals of your customers.

The Challenging Aspect of ‘Green Washing’

While green asset finance presents an enormous opportunity, it is essential to remain cautious of ‘greenwashing’ within the industry. Greenwashing refers to misleading claims made by companies to appear more environmentally friendly than they actually are. As a responsible brokerage, it is crucial to thoroughly assess and validate the green credentials of lenders and investments before engaging in any financial transactions.

Brokers: A Growing Market Space for Green Finance

With the increasing demand for sustainable financing options, brokers have a unique opportunity to leverage their expertise and network in the green finance market. By connecting customers with reliable and reputable green lenders, brokers can play a pivotal role in driving the transition towards a greener economy.

CONCLUSION

We encourage brokers in the network to adopt ESG principles in their operations and embrace the opportunities of green finance. By promoting and handling green finance, our brokers in the network can enhance their reputation, provide innovative funding options for customers and contribute to the transition towards a greener economy. However, it is important to exercise due diligence and avoid ‘greenwashing’ by thoroughly assessing the green credentials of lenders and investments. Our network of asset and commercial lenders can support brokers in navigating this promising market.

Contacts
AFS Group, Asset Finance Solutions & AFS Compliance
  • Greenbank Court, Challenge Way, Greenbank Business Park, Blackburn, BB1 5QB
  • Tel: 01254 958777
Synergy Commercial Finance
  • Lindum Business Park, York Road, Elvington, York YO41 4XR
  • Tel: 01904 481786
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