Sustainability is increasingly shaping business strategy—not just in response to regulation, but as a driver of innovation, resilience and long-term value.
As expectations grow from customers, investors and policymakers, organisations need to do more than just acknowledge ESG principles —they need to act on them. Green finance and sustainability-focused tax incentives offer practical ways to support that action, creating both environmental and financial benefits.
For finance professionals and accountants, this is a unique opportunity to lead meaningful change — by making sustainability part of the bottom line.
What is green finance?
Green finance refers to financial products and investment strategies that support environmentally sustainable activities. This includes things like:
- Loans or bonds linked to climate-friendly projects
- Sustainability-linked finance that rewards positive ESG outcomes
- Green investment funds aimed at net-zero objectives
In the UK and globally, the green finance market is expanding rapidly. As regulatory frameworks evolve and investor expectations grow, organisations will increasingly need professionals who can assess, report on and leverage these financial tools.
Sustainability as a strategic advantage
Investing in sustainability can reduce long-term costs, improve operational resilience and enhance brand value. It can also unlock access to new sources of capital and meet growing demands from customers, regulators and investors.
Accountancy and finance professionals are central to this transformation. From assessing project feasibility to advising on tax reliefs and sustainable investment options, the finance function is now a key driver of ESG strategy.
Key UK tax incentives for sustainable business
In the UK, the government is using the tax system to encourage greener business practices. Here are the most relevant current schemes and incentives:
1. Full expensing for capital investment
Introduced in April 2023, full expensing allows companies to deduct 100% of qualifying capital investment — such as energy-efficient equipment — from their taxable profits in the year of purchase. This is a major incentive for organisations looking to upgrade to more sustainable systems or technology.
2. R&D tax relief for green innovation
Organisations investing in environmentally friendly research — such as new low-carbon materials or energy-saving manufacturing processes — may qualify for R&D tax relief. The UK government has reformed the scheme, merging SME and RDEC routes into a single system from April 2024. Sustainability-focused innovation is likely to remain a strong candidate for relief.
3. Climate Change Levy (CCL) and relief schemes
Businesses that use large amounts of energy must pay the CCL, but can reduce costs through Climate Change Agreements (CCAs). These offer reduced rates for businesses that meet government-agreed energy efficiency targets — providing both a financial and environmental incentive.
4. Plastic Packaging Tax
Introduced in 2022, this tax applies to plastic packaging that doesn’t contain at least 30% recycled content. Businesses that invest in sustainable alternatives or recycled materials can reduce their liability and demonstrate environmental responsibility.
Some innovative examples
To illustrate the power of green finance and tax incentives, let's look at two UK-based success stories that you might have seen in the news:
- Notpla is an Earthshot Prize-winning company specialising in seaweed packaging. Not only does this provide a way to avoid the Plastic Packaging Tax, but the seaweed farmed also captures carbon twenty times faster than trees.
- Pavegen develops and deploys paving tiles that generate energy from footsteps. Their focus on renewable energy and sustainability led to funding from Hinduja, a major global conglomerate.
What’s next for green incentives?
Looking ahead, we can expect the UK government to introduce more targeted incentives to support its net-zero ambitions. These could include:
- Expanded support for low-carbon transport and infrastructure
- Grants or enhanced reliefs for retrofitting buildings
- Further development of green finance regulations to align with the UK Green Taxonomy and ISSB sustainability reporting standards
Staying informed about these changes will be crucial — not just to ensure compliance, but to seize the opportunities they present.
How finance professionals can lead the way
As the demand for ESG transparency and sustainable growth intensifies, finance professionals will be increasingly called on to:
- Evaluate the ROI of sustainable projects
- Integrate ESG performance into financial reporting
- Advise on eligibility for green tax reliefs
- Help secure sustainability-linked funding
Organisations that build this expertise internally will be better equipped to navigate a more climate-conscious economy.
Supporting your ESG journey
At Kaplan, we’re helping finance professionals and organisations develop the skills they need to thrive in a greener future. From qualifications that embed ESG principles to tailored training on green finance, our courses are designed to support both compliance and competitive advantage.
Ready to lead on sustainability?
Whether you're looking to deepen your understanding of ESG principles or get hands-on with sustainable investing, Kaplan has a range of options to support you and your team: