It’s impossible to ignore.
Green initiatives are omnipresent; targets for net-zero emissions were announced by all major political parties at the last election – some more ambitious than others. When Amazon founded The Climate Pledge, to encourage companies to publicly commit to meet the Paris Climate Agreement in 2040, 10 years before the agreement’s official 2050 goal, the world listened.
The plastic bag charge has been rightly lauded as an example of positive behaviour change in people doing their bit for the planet, and there is certainly an appetite within society to take action to protect the environment – thanks in particular to David Attenborough’s Blue Planet – a real watershed moment.
Now, many companies are doing their bit for nature. This includes the newly-established initiative ‘Finance For Good’ which encourages best practice in financial services. It specifically asks firms to maximise the role financial services plays in reaching the UK’s net-zero 2030 target.
But many won’t know that among the many changes they can make in their personal lives to do their bit for the environment is via their mortgage.
Green mortgages have been on the horizon for some time. But many consumers and advisers who have been rushed off their feet with a booming property market are yet to get to grips with the advantages of these products that more and more lenders are offering.
And yet, what lenders are offering if we’re really honest is little more than greenwashing. Taking a low interest mortgage and calling it green does not an environmentally-sound product make.
Nor does it have any impact on the UK’s emissions.
Put simply, the recent wave of ‘green’ mortgages are those that are specifically designed to reward people for buying more energy efficient homes.
According to Ipsos Mori, 52 percent of people care deeply about climate change. But the uptake of green mortgages so far has been negligible.
Until people had to pay for a plastic bag at the supermarket, very few chose to use bags for life. Similarly, before Elon Musk created a vehicle with a ludicrous mode, very few people wanted an electric car.
Until a green mortgage means your energy bills are lower, why would we expect anyone to choose this option?
It’s for this reason that we are working with a cohort of big name lenders to create exactly that; a new, personalised ‘decarbonisation’ mortgage whereby those with D-rated properties and below have access to exclusive deals that come with benefits such as free insulation.
This could reduce a property’s annual carbon emissions from four tonnes to two tonnes, for example, and for existing highly efficient or well-insulated properties, unlock some of the equity to subsidise and fund more radical things like ground source heat pumps, reducing our addiction to natural gas.
This work can increase the value of a property exponentially. This would mean no erosion to the over £7tn pounds of equity in the UK’s housing stock, the equity remains.
Mortgages offer the perfect vehicle to accelerate the green housing agenda. But in order for that to happen the industry must turn its focus to the over 50 percent of homes rated D or below, rather than rewarding the 0.5 percent of properties already rated A.
What’s without doubt, is that the financial services sector has an enormous role to play if the UK is to meet its carbon targets, and there’s no better time than now for the sector to take action and play its part.