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Key Features of Green Finance:

  1. Environmentally Focused: Specifically designed for eco friendly assets and sustainable projects.
  2. Access to Incentives: Often includes eligibility for government grants, tax benefits, and subsidies.
  3. Preferential Rates: Many lenders offer competitive rates to encourage green investments.

Green finance is a vital tool for driving sustainability in the UK, making it easier for businesses to achieve environmental and financial success.

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Green finance

Benefits of Green Finance:

  • Supports Sustainability Goals: Enables businesses to invest in renewable energy, electric vehicles, and energy saving equipment.
  • Cost Savings: Green assets often lower operational costs, such as fuel and energy expenses.
  • Tax Efficiency: Qualifying green investments may be eligible for enhanced capital allowances and tax relief.
  • Regulatory Compliance: Helps businesses meet evolving environmental standards and legislation.
  • Improves Brand Reputation: Demonstrates a commitment to sustainability, which is valued by customers and stakeholders.

Ideal For:

  • Businesses transitioning to electric fleets or renewable energy systems.
  • Companies looking to align with ESG (Environmental, Social, and Governance) goals.
  • Organisations seeking to reduce operational costs through sustainable technology.
Electric car charging

Advantages of Financing an Asset on a Green Finance Agreement in the UK

Green finance agreements are specifically designed to help businesses acquire environmentally friendly assets such as electric vehicles (EVs), renewable energy equipment, and energy-efficient machinery. These agreements are increasingly popular in the UK due to the government’s push for sustainability and the financial benefits they offer. Below are the key advantages:

01

Supports Sustainability Goals

  • Environmental Impact: Green finance enables businesses to invest in eco-friendly assets, reducing their carbon footprint and contributing to the UK’s net-zero emissions target by 2050.
  • ESG Compliance: Many companies need to meet Environmental, Social, and Governance (ESG) standards, and green finance helps align their operations with these objectives.

02

Access to Incentives and Grants

  • Government Grants: Businesses can benefit from UK government schemes like the Plug-in Grant for electric vehicles or tax breaks on renewable energy systems.
  • Tax Efficiency: Green assets may qualify for enhanced capital allowances, allowing businesses to claim full tax relief on qualifying investments in the first year.

03

Competitive Interest Rates

Many lenders offer preferential rates for green finance agreements to encourage businesses to adopt sustainable practices, making it a cost-effective financing option.

04

Reduced Operating Costs

  • Energy Savings: Assets like EVs and renewable energy systems can significantly reduce energy and fuel costs over their lifetime.
  • Maintenance Benefits: Green technology, such as EVs, often has fewer moving parts, leading to lower maintenance costs compared to traditional machinery or vehicles.

05

Future-Proofing Businesses

  • Compliance with Regulations: The UK government’s 2030 ban on new petrol and diesel vehicles makes green finance a strategic choice for businesses looking to stay ahead of regulatory changes.
  • Brand Reputation: Adopting green technologies enhances a company’s reputation, attracting environmentally conscious customers and investors.

06

Preserves Cash Flow

Green finance agreements spread the cost of environmentally friendly assets over time, allowing businesses to invest in sustainability without large upfront expenditures.

07

Flexible Financing Options

Green finance agreements can be tailored to suit the specific needs of the business, with options such as hire purchase, leasing, or refinancing for green assets.

08

Access to Advanced Technology

Financing makes it easier for businesses to adopt innovative green technologies, such as EVs with advanced battery systems or energy-efficient manufacturing equipment.

09

Contribution to the Circular Economy

Many green finance providers support practices like refurbishing and reusing equipment, which align with circular economy principles and further reduce environmental impact.

10

Enhanced Employee and Stakeholder Engagement

Employees and stakeholders increasingly value businesses that prioritise sustainability. Investing in green assets through finance agreements demonstrates a commitment to environmental responsibility.

Examples of Green Assets Eligible for Financing

  1. Electric Vehicles (EVs): Cars, vans, trucks, and buses.
  2. Renewable Energy Systems: Solar panels, wind turbines, and battery storage systems.
  3. Energy-Efficient Machinery: Equipment that uses less energy or produces fewer emissions.
  4. LED Lighting and Smart Building Technologies: Energy-saving infrastructure for offices and warehouses.

Financing an asset on a green finance agreement offers a host of financial, operational, and environmental advantages. It not only helps businesses reduce costs and meet regulatory requirements but also positions them as leaders in sustainability, driving long-term growth and competitive advantage in a rapidly changing market.