2.1 Economic arguments

Take a look at this short reading and make your own notes on the questions that follow. Save your notes so that you can refer back to them at the end of the course.

So far, you have heard from a few low carbon advisors that in order to initiate discussions with SMEs about energy efficiency or environmental impact, the best way is to promote support services using financial messages. The majority of environmental programmes aimed at SMEs adopt a variant of the phrase ‘save money – save the planet’, sometimes described as ‘win–win’. The promotional poster below is from a fictional low carbon SME support organisation, but uses typical imagery and messaging.

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Promotional poster from a fictional low carbon SME support organisation. The image shows a hand holding a pile of coins from which a small branch with green leaves is growing. The main caption is ‘SAVE MONEY, SAVE THE PLANET’. The poster also says, ‘Free energy advice from our experts’ and ‘Grants available for energy efficiency measures’.

The benefit of this kind of marketing message is that it is a clear and simple message that appeals to what many businesses consider their top priority. However,this message has several limitations:

1. It sends mixed messages in terms of values. By promising financial savings, it appeals to a business-owner’s ‘self-enhancing’ values; whereas ‘saving the planet’ appeals to ‘self-transcending’ values, of taking action for the greater good. Many psychologists argue that this kind of mixed messaging won’t lead to a permanent change in attitude towards the environment: those individuals who do take action are unlikely to be equally motivated by each of these principles.
2. It dilutes the importance of taking pro-environmental action for its own sake. If advisors feel the need to justify action to business owners on financial grounds, they are making an implicit assumption about the business owner’s principal motivations, which may not be accurate.
3. The ‘energy efficiency paradox’ describes the observation that SMEs do not take up opportunities for energy savings, even when they involve little or no investment. From this we can conclude that financial arguments are not sufficient to motivate SMEs to take action, and that other barriers must be overcome. When publicly subsidised programmes offer free advice and grants, they are simply aiming to improve the persuasiveness of financial arguments for taking action. More needs to be done to appreciate and address the variety of other factors besides financial cost–benefit that contribute to SMEs decision-making processes.
4. It cannot address the large number of necessary actions and will not lead to financial savings in the short term. Tackling climate change is an enormous, system-wide task that will take decades, and although research has argued that the economic costs of inaction far outweigh the costs of mitigation in the long term, there may not be an immediate return for the organisations concerned. It can set particular kinds of expectations for the advisor prior to a face-to-face visit. For example, if a business owner has welcomed an energy advisor primarily on the basis that they may save them money, they are likely to be disappointed if no significant savings can be identified without additional investment or the trickier topic of staff behaviour change. Although advisors are often able to identify opportunities for efficiency, the framing and expectations of this meeting may make it difficult for them to steer the conversation on to the ‘softer stuff’, or to other (non-financial) benefits.

Now make your own notes on the following questions:

1. Do you agree with the arguments presented in the reading?
2. Besides making financial savings, what other messages might encourage businesses to consider their environmental impact?