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Reflections on COP27: From Awareness to Action

Following the conclusion of COP27, one thing has become clear: we have reached a turning point in the fight against climate change. This is not the turning point everybody talks about; the one at which the prospect of global temperatures rising more than 1.5°C above pre-industrial levels tips from ‘highly probable without urgent action’ to ‘virtually inevitable whatever we do’. This turning point is about stories, and how we use them to galvanise – or stifle – the large-scale behavioural shifts combating climate change is going to require.

The tools used by activists to raise awareness – alarm, fear, urgency, disruption – have played an essential role in getting net zero to the top of the agenda for governments and organisations worldwide. But as we move forward, a strategy driven by shock tactics and ‘climate doomism’ risks converting hard-won awareness into helplessness and apathy. Witness the mixed response to activists adhering themselves to motorways and adorning famous paintings with soup. It’s not that the message is wrong; it’s that it isn’t clear what the general public is supposed to do about it.

How the mortgage sector can take action

What people now need are the knowledge and resources to effect positive change. Not only in their own homes, but in their communities, workplaces and society at large. This is what The Mortgage Climate Action Group was set up to do.

  • We need brokers to be familiar with – and comfortable talking to clients about – green home retrofit technologies, the financing options available, and the regulatory landscape that sits around it all.
  • We need consumers to understand the practical steps they can take to reduce the carbon footprint of their homes, and more importantly, what the cost-benefit profile looks like.
  • We need lenders, technology providers, big and local government, education providers and other stakeholders to work together; to communicate a single version of the truth, and put individual reputational and commercial interests aside in the name of the common good.

We also need the government to get off the fence in its bid to improve home energy performance via the mortgage market, including clarity on the rules for Buy to Let landlords, the future of the EPC rating system and the expectations to be placed on mortgage lenders.

That’s why we are coming together as an industry to speak with a unified voice – so we can stand before government and regulators to demand action and stress the need for urgency.

It’s time to ask: WTF?

One important takeaway from COP27 was the need to focus on the ‘WTF?’ question: ‘Where’s the finance?’ The financial sector holds tremendous power to effect change on a global scale, and will play a central role in the drive to reach net zero.

In April 2022, it became mandatory for the UK’s largest companies and financial institutions to disclose their ‘climate risks and opportunities’ as part of their annual report and accounts following a recommendation from the Taskforce on Climate-related Financial Disclosures (TCFD).

This sends a clear message to business leaders that strong ESG credentials are no longer a ‘nice to have’ – they are a fundamental driver of value, both for investors and the economy at large.

What is also becoming clear is that green credentials are more than one product or service offering; they are about the net impact of the whole organisation.

Of course, another topic to have dominated the headlines during COP27 is greenwashing. We need financial firms’ green commitments and innovations to make a tangible positive impact if their climate-related financial disclosures are to mean anything. In the mortgage space, we need products that help people improve the energy efficiency of their homes, whatever their starting point. Rewarding borrowers for buying properties that already meet high standards of energy efficiency isn’t helpful in the grand scheme of things.

What is also becoming clear is that green credentials are more than one product or service offering; they are about the net impact of the whole organisation. Recent greenwashing accusations have typically centred around the contradictory behaviour of the advertiser – e.g. championing green with one hand and funding fossil fuels with the other – rather than false advertising of a particular product or service per se.

This is a wider point we hope to tackle via The Mortgage Climate Action Group by providing guidance on sustainable business practices – not only so firms can create consistency between their words and their actions, but also from a cost saving and staff engagement point of view.

The importance of messaging

This is not a call to shy away from harsh truths. We should be alert to the fact that the UN now concedes there is no ‘credible pathway’ to prevent global temperatures rising more than 1.5°C above pre-industrial levels. But we do need to think about how we use this information, and what people hear when these messages are presented without context. However bleak the future projections become, building momentum on preventative and remedial action – at all levels of society – will remain a top priority.

The mortgage industry may be one corner of the business landscape, but we have the potential to have an outsized impact.

There is no reality in which embracing fossil fuel dependence and the inevitability of total climate breakdown is a sensible thing to do. Yet this is the impression people are sometimes left with when they hear talk of ‘a point of no return’ – a critical deadline soaring over the heads of our world leaders as they argue over a Coca Cola sponsorship deal. It can seem like all hope is lost. Ironically, the worsening outlook only underscores the need for communications that motivate and inspire people to change their behaviour, even if that means starting small.

Let’s not forget that residential dwellings account for around a third of greenhouse gas emissions in the UK. The mortgage industry may be one corner of the business landscape, but we have the potential to have an outsized impact.

Three actions to take right now: