The word ‘sustainability’ was first coined in 1987, with the idea that “human societies must live and meet their needs without compromising the ability of future generations to meet their own needs”. Simple enough, but it has taken quite some time for those words to really be put into action.
Almost 35 years later and sustainability is now becoming a given – for both consumers and businesses. We recently surveyed 1,000 of our personal customers and found that tackling climate change is important to 78 per cent of people and just over two thirds (67 per cent) are keen to live a greener life.
The pandemic has made over a third (34 per cent) think more about their environmental impact and almost three quarters (74 per cent) said they are actively taking steps to reduce the impact they have on the environment.
I’ve written before about the challenges facing SMEs when it comes to implementing an Environmental, Social and Governance (ESG) strategy. Many believe cost, limited understanding of the link between sustainability and business success, and a lack of available technology are key reasons for the slow progress. It’s not an easy road and although businesses know it’s important, many are still without targets.
At Virgin Money we launched our Environmental, Social and Governance (ESG) strategy last year, and we are focused on where we can make the biggest difference to the environment and society. We have a number of aspirations, including halving carbon emissions across everything we finance by 2030, and we’ve already made some positive progress.
We are also committed to supporting our personal and business customers to make greener choices. One area of focus for our team has been the mortgage market and where we can make a positive impact.
As a result, we’ve recently introduced Greener Mortgages, a new product offering lower rates of interest to customers buying energy-efficient, new-build homes. They are designed to reward customers who buy greener, new-build homes which have an Energy Performance Certificate (EPC) or Predicated Energy Assessment (PEA) rating of A or B.
As well as this, we have partnered with Carbon Neutral Britain, one of the UK’s leading carbon offsetting initiatives, and for each Greener Mortgage sold, Virgin Money will fund sustainable energy projects around the world - such as reforestation, hydro and solar, to offset five tonnes of carbon emissions, the equivalent of those produced by an average UK home over a 12-month period. Together we are also aiming to plant 100,000 trees from the sale of Greener Mortgages. We’re really proud of this new initiative and the initial feedback has been really positive.
The business bank is also working hard to help SMEs build their sustainability credentials. Last year we agreed a new partnership with Future Fit, a non-profit organisation that provides businesses, investors and policy makers tools and guidance to achieve future long-term prosperity. As well as sitting on its Development Council, we launched our Sustainability Benchmarking Tool, which helps businesses improve their sustainability efforts – and rewards them financially for doing so.
SMEs can use the tool to measure the ESG impact of their business operations and immediately be provided with tangible objectives to work towards. We’ve had a lot of interest from our customers on this tool (it’s available on our website and you don’t need to be a customer to use it) and I’ve really enjoyed hearing from businesses about what the tool has shown them and how they are going to use it on their own sustainability journey.
We have also introduced sustainability-linked loans, which reduce the cost of finance for those businesses whose core activities proactively help the economy transition to a more sustainable model.
Virgin Money is the first bank in Europe to offer such loans in commercial banking.
These initiatives are just the start as we work with our customers, offering market-leading products that help them to make positive progress and live greener lives, whether that be personally or in a professional capacity.
Our research clearly shows that sustainability is an important consideration for our customers, and it will remain high on our agenda as well.