First published in Society Matters magazine - Winter edition
Ecology is calling for the pandemic to be turning into a defining moment for climate, supporting a green recovery so we can build back better.
We're already seeing positive momentum towards unlocking the investment needed to deliver a net-zero future. Done effectively decarbonising will create thousands of jobs, tackle climate change and secure the post-Covid recovery.
Ecology has been providing sustainable finance to support positive environmental and social impact for nearly 40 years. Our unique C-Change mortgages incentivise energy efficiency through mortgage pricing, all funded by our members who can be confident their savings are being used to tackle the climate crisis. The pathway to net-zero isn't easy and we must collaborate if we are to unleash our collective potential in aiding the green recovery. Through the BSA's Green Finance Taskforce we're working with other societies to exchange ideas on retrofitting existing housing as well as joining the Green Finance Institute's Coalition for the Energy Efficiency of Buildings.
We already report the emissions arising from our business activies and now we're taking that a step further by calculating the CO2 emissions of the properties we lend on by using the Platform for Carbon Accounting Financials (PCAF) methodology, which intends to harmonise the approach to carbon accounting.
We've also signed up to the Bankers for Net Zero initiative as well as continuing to participate in networks supporting a just a fair transition to net-zero. This includes the United Nations Environment Programme Finance Initiative (UNEP FI), Principles for Responsible Banking and the Global Alliance for Banking on Values.
It has never been more relevant and important for Ecology to continue to be a progressive force for positive environmental change. We hope we're seeing a genuine step change in the way financial services is supporting decarbonisation - greenwashing is no longer an option.
In 2019, Saffron Building Society watched with interest as the government created the Green Finance Strategy. Therefore, 2020 was always going to be the year the society focused on its green strategy and began to plan products that would be industry competitive while offering an incentive to borrowers.
Laura Bright, Senior Product Manager at Saffron Building Society, explains: “The society launched the Retro-Fit mortgage in May this year, and it has performed so well for us. The premise of the mortgage had to remain simple so as not to confuse the borrower. We offer a rate reduction of 0.1% if the homeowner can improve the EPC rating of their home by one band, within six months of completion. Following our review of the green finance initiative guidelines, launched in July 2019, we obtained approval for the mortgage and entered the green finance market.
“Our retro-fit mortgage was also recognised by the Green Home Retro-Fit Finance Guidelines providing industry credibility for the society and the first foray into green finance.
“Alongside the retro-fit mortgage, the team and I had aspirations to develop a green product for our savings range too. The Enviro Saver account allows savers to operate their savings online. When interest is due to be paid, 0.1% is donated to an environmental charity. The chosen charity – during each 12-month interest period – is decided by the customers from a list of nominated environmental charities, which can be changed each year.
“As a regional building society, we are keen to expand our green credentials and support the communities we operate in. As well as developing products to support our members, we have also created a Green Hub on our website, which provides information and ideas on how we can all take small – or big – steps towards a greener future.”
A Green Home Finance Innovation Pilot has been launched to explore innovative finance products that incentivise improving the energy efficiency of UK homes, with Monmouthshire Building Society at the helm.
The VALUER research project is a groundbreaking scheme that will see the first mortgages and additional borrowing offered in the UK that recognise home energy efficiency in their affordability calculations.
Monmouthshire is joined on the project by the Royal Institution of Chartered Surveyors, Rightmove and zero carbon homebuilder and sustainable energy service provider Sero.
The VALUER research aims to develop understanding, and demonstrate the emerging difference in value, between low and high energy homes. As part of the project, green mortgages and additional borrowing products will be made available to two ‘geofenced’ pilot areas in south Wales. This will include a number of new build low energy homes at Parc Eirin in Tonyrefail (pictured) and the Eastern High development in Cardiff. Existing homes in the area making retrofit energy improvements will also take part.
The team will closely monitor product uptake and property values in the pilot areas, to understand the specific features and behaviours that drive the value difference that may emerge. The idea is that home valuations can better reflect low energy homes in future.
Monmouthshire will be the first lender in the UK to adopt the findings from a previous piece of research known as the “LENDERS” project. It can adapt its affordability calculation tool to more accurately reflect actual home energy bills. This could potentially increase the maximum affordable mortgage by up to £12k for a very low energy home, compared to a poorly performing property.
The project is funded by the Department for Business Energy and Industrial Strategy, Green Home Finance Innovation Fund, and is supported by the Green Finance Institute.
Claire Tracey, Chief Strategy and Sustainability Officer at Nationwide, explains what the society is doing to support the transition to a net-zero economy.
“We are making £1 billion of funding available for our Green Additional Borrowing mortgage that offers a lower interest rate to make green home improvements. We’ve also committed to at least 50% of all the homes in our mortgage lending book being EPC C-rated or above by 2030.
“This will build on what we’ve already delivered. In April 2020 all of Nationwide’s operations became carbon neutral, including energy use and emissions – and by 2030 our business operations, suppliers and commuting will be carbon neutral. We use 100% renewable electricity, we’re Carbon Trust Triple Standard accredited for water, waste and energy – and we send no waste to landfill.
“We’re also cutting down plastic waste from debit and credit cards, recently confirming we will introduce cards and card readers made using recycled plastics from spring next year – the first high street lender to commit to do so.
“Those efforts are backed by a drive to effect change beyond Nationwide. We’re a member of the Green Finance Institute’s Coalition for the Energy Efficiency of Buildings, and part of The Partnership for Carbon Accounting Financials (PCAF) UK coalition to promote measurement and disclosure of carbon emissions in the finance sector.
At Newbury Building Society, we recognise the key role we can play in helping to preserve the environment, improve UK housing stock, and in contributing to a more sustainable society.
We have published internally our ‘Green Ambition’, a strategy which outlines our long-term commitment to sustainability. Objectives focus on preserving the environment and encouraging the society, its colleagues and its members to make sustainable choices.
Our Green Ambition has three areas of focus:
1. A greener Newbury Building Society ensuring the society, as a business reduces its carbon footprint and makes sustainable choices in its operations.
2. A commitment to helping our customers and employees lead greener lives by providing access to guidance, education and green financial products.
3. Our responsibility to make homes greener: being prepared for regulatory and environmental change. Understanding how climate change may affect homes and borrowers in the future.
In July, we launched our first green mortgage product, a further advance for existing members, who wish to improve the energy efficiency of their existing home by making environmentally friendly improvements. We are working towards an additional green mortgage product and introducing a green savings product.
We welcomed and were pleased to sign up to the Green Finance Institute’s Green Home Retrofit Finance Principles (GHRFPs), which provide a consistent and transparent framework for financial institutions to use when allocating lending for energy-efficiency improvements in UK homes.
By the end of this year we will have commenced on the path to our Green Ambition; committed to making positive changes for the future.