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Building Societies Conference - Day 4 round-up

The final day of Conference had as its theme 'A business led recovery' with a focus on green and diversity & inclusion.  There were keynotes from Rain Newton-Smith, Chief Economist at the CBI and Dr Rhian-Mari Thomas, Chief Executive at the Green Finance Institute, plus panel sessions on green finance and workplace diversity.  A summary of the final day follows.

A journey to a new economy
Rain Newton-Smith, Chief Economist, CBI

Rain Newton-Smith, Chief Economist at the CBI spent some time reflecting on the last year; she said that speaking to businesses throughout the course of the pandemic had highlighted an incredible golden thread of resilience and that building societies and credit unions were part of this. Rain believes that the banking sector was the salvation of the economy during the pandemic and that the UK will need the financial services sector to build a bridge to the other side.  Building societies and the mutual sector are at the heart of financial services, using innovation to change lives, communities and local regions. 

Rain spoke about the dynamic relationship between business, society and government that secures a sustainable competitive future, and the need for business and government to design an economic strategy for the next decade following the triple shocks of Brexit, COVID-19 and on-going climate change.

She spoke about the need to support the recovery, to identify potential cliff edges before they happen and undermine business confidence, and to support the renewal of the economy at this critical time for the UK.

She welcomed our sector's research and action to meet the needs of older borrowers, the work that’s underway on financial education by many members, including Principality and the Nottingham, how the sector is helping the next generation of savers, and the commitment to local branches such as that shown by Nationwide.

Driving for net zero - the essential contribution of housing

Dr Rhian-Mari Thomas, Chief Executive, Green Finance Institute

Rhian-Mari gave a compelling context to her presentation on climate change and the importance of green finance by talking through the science.

Critically, she outlined how the temperate interglacial period that the earth has been in for the last 12,000 years provided a necessary background for growth, development and economic success – with the whole planet habitable with stable local conditions and critically for economic growth - climate predictability.  This is now changing with scientists estimating that there is just a 1 in 35 million chance that the change is natural rather than exacerbated by humans.  With CO2 up massively in the past three decades we have caused as much damage knowingly as we had previously done in ignorance.

Government policy changes, some with legislation, will accelerate in the next 3-5 years – making climate a Board-level issue across all sectors.  In financial services: risk, stress tests and disclosures are important.  While there is an evident acceleration of ESG, exuberance must be matched by integrity – avoiding greenwashing.

Rhian-Mari referenced the upcoming work on taxonomy in the UK which the Green Finance Institute (GFI) will co-chair with HM Treasury.  Transition to a net-zero economy is an imperative not an option but must be accompanied by inclusion and grabbing the benefits of new ‘green’ jobs.

Buildings in the UK are responsible for 59% of all electricity usage and 23% of all carbon emissions – with homes accounting for around 77% of this.  Homes are the biggest challenge to decarbonise and the least politically attractive to regulate with a lack of current homeowner demand an issue, BUT home retrofit must happen.

She went on to briefly raise some potential carrots and sticks such as Stamp Duty being linked to EPC ratings with less paid on more energy efficient homes, Having an imposed mandatory minimum EPC rating for homes to be sold (as well as rented), the removal of VAT on energy efficiency improvements and the introduction of a green supporting factor for lender capital.

The GFI now has 70% of the lender community signed up to the Coalition for the Energy Efficiency of Buildings (CEEB) and 30% (by balance sheet) have already adopted the GFI Green Home Finance Principles including a number of building societies.

Overall, while not down-playing the challenges, Rhian-Mari is optimistic that the creative and ingenious characteristics of humans will win through. 

Green finance in the year of COP26 - practical moves and experiences
Colin Fyfe, Chief Executive, Hinckley and Rugby Building Society; Luca Bertalot, Secretary General, European Mortgage Federation - European Covered Bond Council (EMF-ECBC); William Carroll, Chief Executive Officer, Monmouthshire Building Society

Luca spoke about the urgent need to take action and the opportunities green mortgages provide. These include the ability to change the consumer mindset, help renovate properties by providing finance and help create a new value chain in housing. The opportunity to retrofit appears when a customer goes into a branch or clicks on the website. If this opportunity is not taken up, it will not reoccur for 20-25 years. 

He also spoke about the need to work internationally to build a new system. He shared the example of Radio Londra, which was broadcast to Italy during the Second World War. That example of international support provides the inspiration for the global collaboration that is needed to tackle the climate challenge.

Will posed the question of how organisations respond appropriately to climate change, and in particular, how low carbon homes are valued. He shared about the pilot  VALUER Project that the Monmouthshire is involved with, in partnership with Sero Homes, Rightmove and the Royal Chartered Institution of Surveyors and funded by the Department of Business, Energy and Industrial Strategy (BEIS).

The project is focused on trialling a new affordability tool to incorporate impact of energy bills, which could result in  a buyer being able to borrow c£12,000 more. It will help develop differential lending criteria, better data and new guidance to valuers, which in turn will play a role in incorporating environmental factors into mortgage lending.

Colin spoke about the pathway to net zero and how to help members through this process. In his experience, consumers often needed help through this process - trusted advisors to help identify the work and identify how to finance it. He shared the Hinckley and Rugby’s partnership with Sero Homes. They had identified a cohort in Wales and were exploring how to help them through this journey.

Colin also spoke about the work the BSA green finance taskforce was in the process of planning, focusing on developing industry relationships, a member webinar/roundtable series consumer education, and a retrofit guide.  If any BSA member is interested in getting involved in this work please gt in touch with Hilary McVitty or Charlie Blagbrough.

Workplace diversity - irrelevant or integral to the future of work and business?
Jonathan Westhoff, Chief Executive, The West Brom; Sandra Wallace, Partner and Joint Managing Director, UK and Europe DLP Piper UK LLP & Interim Co-Chair, Social Mobility Commission; Arun Batra OBE, Founder and CEO, UK National Equality Standard and Partner at EY; Jane Hanson, Chief People Officer, Nationwide Building Society

The final session at the BSA virtual conference was on the important topic of workplace diversity.

The three panelists spoke passionately about why diversity and inclusion – or inclusion and diversity as it is positioned at Nationwide – was indeed integral to workplace and business success and the importance of data in establishing current position and movement.

There was acknowledgement of the significant progress made with women on boards but a strong sense that wider diversity and inclusion must now be brought into focus. 

Arun Batra, noted the explosion of general interest in ethnicity, largely attributed to The Black Lives Matter movement, but he cautioned that there was a risk of interest tailing off as businesses focus on survival in the post-pandemic environment – diversity across all protected characteristics needs to remain a critical Board agenda item was his message.

Sandra Wallace, focused on social mobility and the need to harness talent from all communities, irrespective of an individual’s background. A great place to start is improving community outreach and providing work experience, apprenticeships and  particularly to schools with a high proportion of free school meals. Sandra also referenced the toolkit from the Social Mobility Commission for employers in financial services. 

Jane Hanson added insight on the approach to inclusion and diversity at Nationwide, where embedding it in the culture of the organisation, creating safe spaces to speak up and providing reciprocal mentoring for leaders ensured it remained front of mind and a regular topic for Board discussion. Their mission is to create an inclusive culture where everyone can thrive and for their society to reflect the communities they serve.

The overarching message from the panelists was that diversity and inclusion is as important as setting strategic vision, budgets and sales targets and that collecting data based on outcomes is critical.

Finally, there had been several mentions of intersectionality during the session, so it seemed appropriate to end with a simple definition … ‘how aspects of a person’s identity can create multiple barriers or discrimination’.

 

A final huge thanks to our headline sponsors DXC Technology and Temenos; nCino; Salesforce and Target Group and our other sponsors Sopra Banking; TCS BaNCS and all of our exhibitors.

Posted by Katie Wise on 07 May 2021