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How the finance sector can embrace the circular economy

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Rachel Houghton, Managing Director at Business Moves Group

 

Everyone knows the maxim ‘Reduce, reuse, recycle’. However, as sustainability issues impel business leaders to confront their environmental impact, we all need to go further than this three-step maxim.

This means, working towards the circular economy which can be achieved though the ten R’s. they are:

  1. Refuse

    Rachel Houghton

  2. Rethink
  3. Reduce
  4. Reuse
  5. Repair
  6. Refurbish
  7. Remanufacture
  8. Repurpose
  9. Recycle
  10. Recover

This list gives a great overview of how to cut down on waste and can be used on a personal level as well as for businesses. The key is to go beyond thinking of sending waste to landfill as a last resort – it should not even be a consideration. Your last resort should be recycling, but there is plenty that can be done before you might reach this point to cut down on waste.

 

Office space for the circular economy

Businesses in the finance sector often have large office spaces in London and across the country. As we move towards making better business decisions for the circular economy, discussions should involve your real estate too.

After the wake of the pandemic, we saw the first, large scale trial of working from home operate worldwide, it was clear to many that it wasn’t as difficult as everyone anticipated. Now, 38 per cent of working adults of in the UK have reported to having worked from home at some point in the week. Businesses can potentially save money by having remote or hybrid workers, and the future of the office is now being questioned. Bloomberg reported that large banks such as HSBC expects to shrink its property footprint by 40 per cent due to the pandemic changing the role of the office.

If finance businesses do decide to cut down their real estate, the next question is how to do this in line with circular economy principles. Repurposing a building is one of the simplest routes, rather than for it to be torn down and have something new rebuilt in its place. Whilst the aesthetics of the building may change, the general infrastructure and frame could, and should, remain for it to become a circular choice.

 

Sustainable furniture management

The Mace Workplace Survey Report 2021 found that around three quarters of respondents intend to make upgrades to their workplaces in the next two years.

If your business decides to leave an office building, you have more items to deal with including desks and chairs. Communal tables and sofas, filing cabinets and lockers will all be part of the process. So, those who are leading the project will need to address the ten R’s and identify how they can reduce their environmental impact.

One of the best ways to approach your furniture when making changes to your office or leaving it is to do a furniture audit. That way, you can catalogue every item and it will be easier to identify what you decide to keep or part with.

For any furniture you decide you don’t need anymore, these items can be reused in other offices, repurposed for uses outside of office work, donated or sold. Recycling should be your last resort.

We supported a major food brand with an office relocation in London and sold enough excess furniture that the overall cost of the project was reduced by 50 per cent. Across all our work in 2021, we sold 10,000 items on behalf of our clients

Furthermore, existing furniture has already expended its embodied carbon. This includes the emissions created in sourcing materials, making the item, and transporting it. The average office chair has an estimated carbon footprint of 72 (kgCO2e) and a six-person bench desk 228 (kgCO2e). So, repurposing, refurbishing, or reusing is a great way to reduce carbon emissions.

An alternative to selling is donating. We partner with Business2Schools and donate unwanted office furniture to schools throughout the UK on behalf of our clients.

 

Recycle and recover

When an item has reached the end of its life cycle, we need to look at recycling as a final option. Even at this stage it’s important to make a conscious decision by choosing a recycling firm that will recover all the resources from an item and report back on where those resources have gone. By recycling effectively, it has the potential to save your business money, as you are less likely to come into contact with disposal fines, and valuable parts of the chair such as metals and textiles, can be sold to recyclers.

In 2021, we managed 1,252 tonnes of waste and diverted an average of 98.6 per cent from landfill. That means that in many projects, we diverted 100 per cent, and in 2022 we’re aiming to get our average even higher.

The circular economy is critical to future sustainability, which does require a change in mindset across every business. For any company that has large quantities of real estate, which is common for the finance sector, sustainable furniture management has a part to play. And not only will this help achieve CSR goals, but it is often a cost-effective choice too.

Finance

Mini-Budget 2022:

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Tax giveaway is a boost for business, but will it drive growth or fuel inflation?

 

Chancellor Kwasi Kwarteng has announced a comprehensive wave of tax cuts and other incentives for individuals and businesses, as well as confirming some of the announcements made earlier this week.  The measures are part of a new Growth Plan, which is aiming to boost economic growth. However, only time will tell if they will curb inflation and temper recession concerns.

Richard Godmon, tax partner at accountancy firm, Menzies LLP, said:

“With another fiscal statement to follow, this mini-Budget is a defining moment for the new Government and tax cuts are firmly back on the agenda.

“The biggest surprise was the decision to simplify Income Tax by moving to a single higher rate of tax for high earners of 40%, with effect from April next year. This will encourage a spirit of entrepreneurialism by incentivising work and putting money back into the economy. The flip side is that the Government might also be hoping that the move increases the tax take, as it could help to draw people back to the UK who may have previously chosen to live and work elsewhere, while encouraging others to stay put.

“The reduction in dividend tax rates and the abolition of the additional rate of tax from April 2023 means that business owners will need to consider carefully the timing of dividend payments over the next few months.”

Up to 40 new Investment Zones

The Chancellor also outlined plans to create up to 40 new ‘investment zones’ in England, with the potential for more in Wales, Scotland and Northern Ireland. Businesses in these zones will benefit from wide-ranging tax breaks including 100% tax relief on investments in plant and machinery, and no National Insurance Contributions will be payable on the first £50,000 earned by new employees.

Richard Godmon, tax partner at Menzies LLP, said: “The new Investment Zones are reminiscent of the former Enterprise Zones, but they will provide a much more favourable tax environment for businesses and they promise to become a magnet for inward investment. There are currently 38 areas in England on the list for consideration and we look forward to finding out which ones will be selected.”

Incentivising business investment and Corporation Tax rise ‘cancelled’

The limit of the Annual Investment Allowance (AIA) will not revert to £200,000 as planned in April next year, it will now permanently stay at £1 million.

Richard Godmon, tax partner at Menzies LLP, said:

“Capital allowances are highly valued by businesses and they will be pleased that this one in particularly is going to stick at £1 million and that this is no longer being described as a temporary measure, but is to be made permanent.

“The decision to cancel the planned increase in Corporation Tax (due to tax effect next April) will be a relief to many small and medium-sized businesses who have been concerned that this increase would erode profits further and make it even more challenging to remain viable.”

Incentivising entrepreneurial investment

The Chancellor highlighted plans to increase the cap on investments that can be made under the Seed Enterprise Investment Scheme (SEIS) from £150,000 to £250,000. Individuals making investments in start-ups up have had the limit doubled to £200,000, with the 50% income tax relief remining the same. The Government also gave its commitment to continuing to back the Enterprise Investment Scheme (EIS).

“These announcements send a signal to entrepreneurial investors that tax should not be a barrier and the Chancellor wants to expand incentives in this area,” added Richard Godmon, tax partner at Menzies LLP.

Stamp Duty Land Tax

The threshold at which Stamp Duty Land Tax (SDLT) becomes payable on residential property purchases in the UK has been raised to £250,000, double its previous level in a bid to boost the property market. In addition, first-time buyers will not have to pay SDLT on property purchases up to a value of £425,000 (up from £300,000). Both measures will take effect from today.

Richard Godmon, tax partner at Menzies LLP, said:

“The decision to raise the SDLT threshold is designed to build consumer confidence and boost the housing market generally. For property developers it will fuel activity by creating demand, particularly from first-time buyers, and help to free up finance to front-end development projects.”

IR35 Changes

Richard Godmon, tax partner at Menzies LLP, said:

“The repealing of the 2017 and 2021 IR35 changes will be hugely welcomed as it will remove an administrative burden, risk and cost, enabling businesses to devote resources to furthering their growth strategies.

“It is important to recognise that IR35 has not been abolished and the result of the changes is that the risk and compliance costs are being returned to the individuals and their personal service companies.  HMRC will no doubt redirect their focus towards the contractors, which will bring challenges and make enforcement more difficult.”

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A zero trust environment is critical for financial services

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Boris Bialek, Managing Director of Industry Solutions at MongoDB

Not long ago security professionals were still focused on protecting their IT in a similar formation to mediaeval guards protecting a walled city – concentrating on making it as difficult as possible to get inside. Once past this perimeter though, access to what was within was endless. For financial services, this means access to everything from personal identifiable information (PII) including credit card numbers, names, social security information and more ‘marketable data’. Unfortunately, we have many examples of how this type of security doesn’t work, the castle gets stormed and the data isn’t protected. The most famous is still the Equifax incident, where a small breach has led to years of unhappy customers.

Thankfully the mindset has shifted spurred on by the proliferation of networks and applications across geographies, devices and cloud platforms. This has made the classic point to point security obsolete. The perimeter has changed, it is fluid, so reliance on a wall for protection also has to change.

Zero trust presents a new paradigm for cybersecurity. In this context, it is already assumed that the perimeter is breached,no users are trusted, and trust cannot be gained simply by physical or network location. Every user, device and connection must be continually verified and audited.

What might seem obvious, but begs repeating, with the amount of confidential customer and client data that financial institutions hold – not to mention the regulations – this should be an even bigger priority. The perceived value of this data also makes financial services organisations a primary target for data breaches.

But how do you create a zero trust environment?

Boris Bialek

Keeping the data secure 

While ensuring that access to banking apps and online services is vital, it is actually the database that is the backend of these applications that is a key part of creating a zero trust environment. The database contains so much of an organisation’s sensitive, and regulated, information, as well as data that may not be sensitive but is critical to keeping the organisation running. This is why it is imperative that a database is ready and able to work in a zero trust environment.

As more databases are becoming cloud based services, a big part of this is ensuring that the database is secure by default, meaning it is secure out of the box. This takes some of the responsibility for security out of the hands of administrators because the highest levels of security are in place from the start, without requiring attention from users or administrators. To allow access, users and administrators must proactively make changes – nothing is automatically granted.

As more financial institutions embrace the cloud, this can get more complicated. The  security responsibilities are divided between the clients’ own organisation, the cloud providers and the vendors of the cloud services being used. This is known as the shared responsibility model. This moves away from the classic model where IT owns hardening the servers and security, then needs to harden the software on top – say the version of the database software – and then needs to harden the actual application code. In this model, the hardware (CPU, network, storage) are solely in the realm of the cloud provider that provisions these systems. The service provider for a Data-as-a-Service model then delivers the database hardened to the client with a designated endpoint. Only then does the actual client team and their application developers and DevOps team come into play for the actual “solution”.

Security and resilience in the cloud are only possible when everyone is clear on their roles and responsibilities. Shared responsibility recognizes that cloud vendors ensure that their products are secure by default, while still available, but also that organisations take appropriate steps to continue to protect the data they keep in the cloud.

Authenticate Everyone  

In banks and finance organisations, there is always lots of focus on customer authentication, making sure that accessing funds is as secure as possible. But it is also important to make sure that access to the database on the other end is secure. An IT organisation can use any number of methods to allow users to authenticate themselves to a database. Most often that includes a username and password, but given the increased need to maintain the privacy of confidential customer information by financial services organisations this should only be viewed as a base layer.

At the database layer, it is important to have transport layer security and SCRAM authentication which enables traffic from clients to the database to be authenticated and encrypted in transit.

Passwordless authentication is also something that should be considered – not just for customers, but internal teams as well. This can be done in multiple ways with the database, either auto-generated certificates that are needed to access the database or advanced options for organisations already using X.509 certificates and have a certificate management infrastructure.

Tracking is a key component 

As a highly regulated industry, it is also important to monitor your zero trust environment to ensure that it remains in force and exompasses your database. The database should be able to log all actions or have functionality to apply filters to capture only specific events, users or roles.

Role-based auditing lets you log and report activities by specific roles, such as userAdmin or dbAdmin, coupled with any roles inherited by each user, rather than having to extract activity for each individual administrator. This approach makes it easier for organisations to enforce end-to-end operational control and maintain the insight necessary for compliance and reporting.

Next level encryption

With large amounts of valuable data, financial institutions also need to make sure that they are embracing encryption – in flight, at rest and even in use. Securing data with client-side field-level encryption allows you to move to managed services in the cloud with greater confidence. The database only works with encrypted fields and organisations control their own encryption keys, rather than having the database provider manage them. This additional layer of security enforces an even more fine-grained separation of duties between those who use the database and those who administer and manage it.

Also, as more data is being transmitted and stored in the cloud – some of which are highly sensitive workloads – additional technical options to control and limit access to confidential and regulated data is needed. However, this data still needs to be used. So ensuring that in-use data encryption is part of your zero trust solution is vital. This also enables organisations to confidently store sensitive data, meeting compliance requirements, while also enabling different parts of the business to gain access and insights from it.

Securing data is only going to continue to become more important for all organisations, but for those in financial services the stakes can be even higher. Leaving the perimeter mentality to the history books and moving towards zero trust – especially as cloud and as-a-service infrastructure permeates the industry – is the only way to protect such valuable data.

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