Ecology Building Society publishes industry's first carbon footprint for mortgages

Banks are being urged to deliver greater transparency around the emissions impact of their lending activity, after Ecology Building Society published the industry's first carbon footprint for mortgages.

The ethical building society released a report yesterday, which uses standards established by the Partnership for Carbon Accounting Financials (PCAF) to calculate a carbon footprint of 1,785 attributed C02 tonnes in 2020 from all its residential lending. The analysis covers all emissions arising from the burning of fossil fuels to heat and power mortgaged properties in Ecology's portfolio and covered self-builds, renovations and conversions, other new builds and community housing projects.

Ecology became one of the first members of PCAF UK group when it formed in 2020 and also co-chair the Residential Property working group, which is developing and sharing best practices on measuring emissions from mortgaged properties with a view to improving the methodology. The group plans to launch a report at the COP26 Climate Summit in Glasgow this autumn, in a bid to encourage more mortgage providers to transparently measure and disclose their emissions.

The built environment currently contributes to around 40 per cent of the UK's overall carbon footprint. The Ecology findings come on the back of a damning report by the Climate Change Committee this week, which accused the government of being "woefully" unprepared for the effects of climate change on housing and failing to take sufficient steps to curb emissions from buildings. The CCC said more action is urgently needed to curb emissions from homes and make properties more climate resilient and energy and water efficient. Currently 570,000 new homes have been built in the UK since 2016 that will not be able to withstand future higher temperatures, it warned.

By reporting emissions associated with its mortgage portfolio, Ecology hopes to add weight to the growing calls for banks to measure and disclose their financed emissions, while also providing a further incentive for lenders to develop green mortgage offers that provide households with lower interest rates if they invest in green home improvements.

"To achieve net zero we need to unlock the financial solutions required to transition to a low carbon economy," said Ecology's Sustainability Lead, Alison Vipond. "Measuring our financed emissions using the PCAF methodology gives us a better understanding of our current mortgage portfolio. We are using this to help develop our net zero plan, especially to target and improve energy inefficient properties.

"We're looking forward to sharing our experience with other banking providers at COP26 so that they can join us and use the carbon accounting approach to focus on building a sustainable future."

The news comes in the same week as high street bank TSB launched a new green mortgage product, designed to offer more attractive interest rates to homeowners who take on additional borrowing to fund green improvements to their property.