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Guest blog: Decarbonising housing in the UK - driving greater consumer action

By Philippa Cardno, Newbury Building Society and Gareth Griffiths, Ecology Building Society. 

By Philippa Cardno, Chief Executive, Newbury Building Society and Gareth Griffiths, Chief Executive, Ecology Building Society

At this year’s Building Societies Annual Conference, I chaired a lively debate around the ‘green  mortgage market.’ Discussions focused on the obstacles and challenges preventing homeowners from making the necessary retrofitting measures to improve the environmental impact of their homes.

With the Government looking to the financial services sector to help provide solutions for  homeowners, it is clear that lenders themselves require more knowledge and understanding as to how the market is working today in addition to how it needs to work tomorrow.

Therefore, it is no surprise that consumers are also finding it confusing. Consumers require independent, reliable information on what the best approach for retrofitting their home is, what it will cost, and what benefit the improvements will provide. Without this knowledge, it’s difficult to envisage how consumers will be motivated to seriously consider retrofitting.

Three key issues

The conference session ‘Decarbonising housing in the UK: driving greater consumer action’ highlighted three key issues.

1. What do we mean by a ‘green mortgage’?

2. Are Energy Performance Certificates (EPCs) fit for purpose?

3. How to address the national labour shortfall needed for retrofitting homes?


Here, Gareth Griffiths, Chief Executive, Ecology Building Society, who was on the panel shares his thoughts on these issues:

“When I look across the mortgage industry, often a ‘green mortgage’ is merely a 10 basis point discount mortgage. To me, that’s the furthest away from what a ‘green mortgage’ should be!

As we think about the future of the buildings and housing stock we already have, we need to shift our thinking away from the broken EPC system and start to think about energy efficiency in different dimensions.

In life there are problems and predicaments, the difference being that problems have solutions, whilst predicaments can’t be solved… EPCs are a problem for a number of distinct reasons particularly that an EPC can often boil down to the ratio of a property’s total floor area and the hypothetical fuel costs. Furthermore, looking at the UK’s energy mix, plans to decarbonise the national electricity grid, as well as the cost of ‘real-world’ energy, the EPC rating and reality of energy efficiency can begin to diverge. This could mean a more energy efficient property could get a lower Standard Assessment Procedure (SAP) score.

At the same time, advancements in the efficiency of heat pump technology, widely considered to be a significant enabler for energy efficiency, are not being considered.

The EPC system has not been updated since 2012 and contains a number of inaccuracies. Not only that, but we also need to start thinking in terms of real-world energy usage and how occupants actually use and heat their properties.

Lenders are key in trying to help address some of the issues inherent into the system. We should be urging government to help to ensure that creation of the 100,000 jobs required for retrofit at scale and the reskilling of gas engineers, who will have been made redundant, happens. We should also challenge the government to take bold action, such as the US Inflation Reduction Act, which potentially provides fiscal incentives to stimulate homeowners to act.

We know another challenge for consumers is knowing where to start with retrofitting their home. PAS 2035 has given social housing organisations a defined standard by which to approach retrofitting by providing a number of clearly defined roles within the value chain. Can the same standard be applied to individual dwellings across England and Wales? Most certainly, however, as with many nascent technologies, there are poorly educated and/ or unscrupulous suppliers willing to install expensive technologies which may not have the desired impact of increasing energy efficiency.

Having a trusted scheme of assessment and implementation is going to require collaboration across the supply chain together with finance partners. It will be interesting to see the suppliers who will be endorsed as part of the government’s Green Homes Finance Accelerator Programme.

In 2020 Ecology was one of the founder signatories of the Partnership for Carbon Accounting Framework (PCAF). PCAF is designed to help financial organisations measure and disclose their emissions, as well as set targets and a strategy for reduction, in line with the Paris Climate Agreement 2015. PCAF has allowed Ecology to use a defined and consistent methodology for reporting our own financed emissions, and if Nationwide can achieve the same, what is to stop the rest of us from following suit?

This is an opportunity to demonstrate our mutuality, be transparent and display willingness to ‘do no harm’ - a collective purpose during the next pivotal decade for our planet.”

What are the next steps?

As lenders, we can agree that we certainly do not have all the answers, or even all the questions we should be asking! But we do know building societies can work together to help solve some of the key challenges mentioned here.

The role for building societies to play going forward, includes the ability to remove friction from the retrofit consumer journey and the collective messaging to take to government. There is an obvious need for clear retrofit parameters, similar to PAS 2035, which are easy for both consumers and lenders to understand. For Net Zero by 2050 to be possible, delivering efficiencies in our existing housing stock is essential. According to one study, if current trends continue, 88.5% of emissions from housing will come from existing homes, and just 11.5% from the building and running of new houses [1].

However, we must not risk creating mortgage prisoners by implementing policies or measures that disadvantage some homeowners – it is important no-one is left behind.

The BSA Green Finance Taskforce group, chaired by Colin Fyfe, Chief Executive of Hinckley & Rugby Building Society continues to bring BSA members together to explore green issues. The group has been working to increase take-up of green financial products and energy efficient home improvements. It is exploring home retrofit innovations and has worked with the Green Finance Institute (GFI) and others involved in housing finance to develop a retrofit guide for intermediaries, with a similar guide for consumers next on the list. Education is a key factor in helping to solve the lack of direction consumers currently have.

Next Steps:

If you are interested in finding out more about the BSA Green Taskforce, please contact chris.busey@bsa.org.uk

A copy of the GFI guide for Intermediaries can be found at https://www.greenfinanceinstitute.co.uk/news-and-insights/green-finance-institute-launches-new-resource-to-supercharge-green-home-retrofit-solutions/

[1] zu Ermgassen et. al. A home for all within planetary boundaries: Pathways for meeting England’s housing needs without transgressing national climate and biodiversity goals, Ecological Economics, Volume 201, 2022.

This article was first published in Society Matters magazine