In the last six years, we’ve got closer to our Green Plan goals by reducing our carbon footprint by 48% by switching to alternatives like heat pumps and solar panels, to benefit from grid decarbonisation. Even smaller changes, like LED lighting, have helped reduce electricity bills for our customers by up to 75%.
Such initiatives mean an initial outlay – and that’s getting harder with limited NHS capital, and your budget already stretched to keep delivering for your patients.
Set up an internal funding stream
An internal funding stream is a process within an organisation that dedicates capital for specific purposes. Investing in a sustainability fund can help you take a strategic approach to delivering your Green Plan. As it’ll help make sure there’s budget set aside for energy efficient and net-zero initiatives.
At NHSPS, we do this through our Regional Energy and Environment Fund (REEF). This fund covers the additional upfront costs of sustainable alternatives on projects that are already going ahead. For example, instead of replacing an ageing gas boiler with a new one, we can use funding from REEF to supplement our capital projects budget and install a heating system that doesn’t rely on gas or oil.
Creating a fund like this not only gives you the flexibility to invest in green initiatives but also make smarter, more sustainable choices for your estate.
How can you set up an internal funding stream for sustainability?
1. Allocate a budget to the funding stream
At the start of the financial year, assess your available budget and identify an amount you can ring-fence for the internal funding stream. Allocating the right level of capital is key to its success.
Start with an amount that’s realistic for your organisation. As the funding stream proves its value over time, you can demonstrate the need for further investment and gradually increase its size.
2. Get stakeholders on board
Get support from your finance team and key decision makers. While sustainable choices may have higher upfront costs, their long-term savings make them worthwhile. But not everyone will see this right away. So, you may need to educate your peers and present a clear case for the long-term benefits of the investment.
The sooner you get stakeholders on board, the easier and more cost-effective it is incorporate sustainability into project designs from the start.
3. Have a clear process for using the funding stream and measuring success
Set clear criteria for how the funding stream will be used so you can invest in the right projects at the right time. It’s important to be consistent in how you allocate funding, focusing on projects that deliver the best results.
When making these decisions, consider both environmental and economic return on investment (ROI). And take into account that some projects will take longer than others to show savings. For example, LEDs and solar projects will start to show savings straightaway, with a payback of less than a year or 5 years respectively. While projects relating to heating will need a full heating season to show its savings.
A flexible and holistic approach to calculating pay back will help you make the right investments. Read our next blog in the series to learn more about key sustainability metrics and proving ROI.
Want to learn more?
Read chapter 5 of our guide to NHS estate funding to learn more about creating and using internal funding streams. Including information on timings to be aware of, key insights and case study examples.
