Making the case for environmental improvements

Make the financial case for environmental improvements

Guide

Some projects require money in order to achieve their objectives. If everyone can see that financial decisions have been made carefully, and that there is enough money for the project, they will take your plans more seriously. You should then find it easier to get people to commit their time and expertise.

Have a clear budget for environmental improvements

Make sure everyone who will be responsible for any part of the budget knows:

  • exactly how much they have to spend
  • what they can spend it on
  • how they are expected to report back on their investment

Carry out an investment appraisal

If you are not the budget holder, you will probably need to make the financial case for why management should invest in your project. You should show how the time and resources you need will offer good value for money.

You could carry out an investment appraisal to demonstrate how long it will take your project to pay off the costs involved, and any possible profits that it could generate.

There are a number of different investment appraisal methods you could use, including:

  • payback period - takes financial returns and costs over the project period, and calculates how long the project woud take to pay for itself
  • average rate of return - looks at the average returns over the years of the project, and divides by cost to give a percentage return
  • discounted cashflow - takes into account that a return of £100, for example, in several years is worth less than a return of £100 now, so discounts the estimate of returns

Each method has pros and cons, so it's worthwhile using two or more different methods. See our guide on investment appraisal techniques.

Not just the bottom line

Make sure that you consider all the financial benefits of your project. Many of the benefits that can flow from making environmental changes will not be immediate and may not show up directly in your bottom line. For example, you may find that employees are happier working in a 'green' company and that staff turnover is reduced. This could significantly cut recruitment costs.