Small Talk: Business plans to cut emissions have gone up in smoke

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The Independent Online

Hardly a day goes by without emails pinging into the in-boxes of most business journalists, explaining how one company or another is doing something to save the environment. From investing in eco projects, going carbon neutral (whatever that actually means), or asking the recipient of that aforementioned email, "do you really need to print me?", pretty much every company, large and small, tries to convince us that it is doing its bit.

The truth is something very different. According to a poll conducted by GE Capital, small and medium enterprises (SMEs) are spending less time and less money worrying about emissions reductions and other green issues, especially since the recession.

Britain is aiming to cut its carbon emissions by a pretty ambitious 34 per cent by 2020, but the research shows that small companies' commitment to this end has become less solid since the downturn. According to GE, there has been a 23 per cent increase since 2007 in the proportion of SMEs doing "little or nothing" to reduce emissions.

The proportion of companies which said they were investing little or nothing in green initiatives rose from 30 per cent in 2007 to 37 per cent in 2010, the research shows. Only 9 per cent of SMEs now put any significant investment into doing so.

"There is no doubt that the recession has had a major impact on SMEs' attitudes and strategies towards green investments," said John Jenkins, the chief executive of GE Capital UK.

"Many firms may have chosen to defer or halt any further outlay into energy and CO2-efficient equipment, preferring to consolidate their financial positions instead. With UK businesses accounting for 15 per cent of emissions, the only saving grace for the climate was the reduction in output caused by the recession which contributed to the lower emissions witnessed over the period."

On a slightly more positive note, when it comes to considering installing solar panels, wind turbines or other methods of reducing emissions and lowering fuel costs, 4 per cent of SMEs have recognised the economic benefits and have already invested, while one in seven is considering doing so, GE says.

Summer lull becalms IPO prospects on Aim

The improved sentiment in the economy (which may well come to a crashing end when the coalition's spending cuts are implemented towards the end of the year) is not trickling down the Alternative Investment Market (Aim), a study shows.

Not only did the junior market lag behind the main list during the second quarter of the year, it also failed to match its own improved performance in the first three months of 2010, the accountancy firm PricewaterhouseCoopers (PwC) said. It found there were just 10 initial public offerings (IPOs) worth a total of £133m between April and May, compared with eight flotations at the start of the year, totalling £217m.

Meanwhile, the main market has been gaining momentum since the beginning of 2010 with the value of IPOs increasing by what PwC described as, "a significant £905m", between the first and second quarters.

"The recovery we are beginning to see on the main market hasn't yet fed through on to Aim," said David Snell, a partner at PwC. "The second quarter is typically the busiest across all exchanges, yet we have seen only 10 companies float on Aim in [the second quarter] with a total offering value of £133m, which shows a drop in value since Q1 of £84m. Once again, mining and real estate are the favoured sectors."

Analysts have pointed to the looming spending cuts, which are likely to see some government departmental budgets cut by up to 40 per cent, as a reason for reticence on the part of companies and investors to support new listings, especially with many expecting SMEs to get a proportionally smaller slice of the government pie once the cuts are implemented.

"Whilst there is anecdotal evidence of a continuing build in the pipeline of companies interested in an IPO on Aim, this has yet to translate into any increase in actual IPOs," added Mr Snell.

"This would appear to reflect continuing caution among the investor community as to the prospects for companies interested in coming to the market. With the summer months upon us, it now appears unlikely that there is any real prospect for recovery of the Aim IPO market until autumn at the earliest."



Canadian investors tap into Ithaca Energy

They're a wily lot, those Canadians. Ithaca Energy, the London-listed, but ostensibly Canadian, oil and gas exploration company, said last week it had raised C$158m (£102m) from investors to help to develop its Stella project in the North Sea, along with a US$140m (£105m) debt facility from Lloyds Banking Group (see, Lloyds does lend).

But the Canadian investors did not wait to be asked to stump up the cash. The so-called bought deal, where investors club together without the company needing to bother with a roadshow or other investor meetings, raised C$81m (£52m), with a more standard equity-raising contributing a further C$77m (£49m).

It is fairly obvious why the investors wanted to back Ithaca. It has consistently upgraded its reserves in recent months and with a more stable oil price, the incentive to expand the range of its drilling programme is obvious. Moreover, the company's shares have jumped by 250 per cent in the past six months.

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