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Money talks

Gareth Griffiths, CEO at Ecology Building Society, considers the aims of COP27 and the courage required to move from words to action
Money talks

This article first appeared in our COP27 special issue of My Green Pod Magazine, published on 11 November 2022. Click here to subscribe to our digital edition and get each issue delivered straight to your inbox

As the wheels of COP27 whirr into motion, for the UK a long and winding journey to net zero remains ahead.

Achieving carbon emissions targets and reversing ecosystem breakdown requires a whole economy transition.

It can feel like an overwhelming objective but, while appreciating the bigger picture is important, this transition will be made a reality if each of us concentrates on the positive actions that we can take – some of them small at first – and speaks up for the future we want.

For Ecology, committing ourselves in service of positive change isn’t something new; through our lending for sustainable projects, we’ve been supporting the development of low-impact carbon homes and communities for over 40 years. Our ecological mission remains the same as when we first began, but has acquired an increasing urgency.

The escalating destruction of our ecosystems means that we, along with the rest of the financial sector, now have a unique responsibility to take deliberate and ambitious action to avert the worst impacts of ecological breakdown.

COP27 has been hailed as the ‘implementation COP’ – the one where we’ll see the pledges announced at previous COPs transformed into real action.

There will be a particular focus on the need to activate finance to unleash the $125 trillion in investment that the International Energy Agency estimates is needed to achieve the world’s 2050 climate goals. This is something we, and many others, sincerely hope will play out.

So, let’s turn to the goals of COP27 and the progress that we want to see within Ecology’s focus areas: ethical finance, low-impact carbon building and resilient communities.

1. From pledging to implementing

The pledges and targets at COP26 reinforced the critical role of green finance to support the transition to a low-carbon economy. Ecology is a living example of this, providing lending for sustainable living, including energy-efficient self-builds and retrofits of existing homes.

Given that UK homes currently account for around 20% of the country’s carbon emissions and are some of the least efficient in the world, there are huge gains to be made from improving the performance of our existing housing stock and ensuring that new homes are built to the best possible standards.

For this to happen, we need a coordinated approach to determine the best efficiency measures for each home, alongside grants and incentives – especially for properties that are more difficult to improve.

This is an approach that is critical to achieving net zero goals not only in the UK, but also in other countries within which domestic energy use contributes a significant proportion of CO2 emissions. Other countries have already adopted many forward-thinking initiatives, and in that sense the UK is behind the curve.

Here in the UK, we’re seeing a big push to install heat pumps, with the government providing grants to allow homeowners to replace inefficient boilers with low-carbon systems.

Alongside this, we recently introduced an incentive option for our borrowers to install heat pumps.

While heat pumps are a step in the right direction, homeowners also need support to improve insulation and ventilation if they are to create low-carbon, healthy living spaces and realise the potential of any energy-saving technology.

This is why Ecology is calling for a coordinated National Retrofit Programme to address the fragmented energy-efficiency supply chain and skills shortages, so that we can kickstart the retrofit revolution.

2. Delivering on adaptation

Helping people, communities and countries to protect themselves from the effects of climate change is crucial to the low-carbon transition.

The impacts of the climate crisis are already being felt around the globe, sadly with the effects often disproportionately impacting those with the lowest incomes and the least resources to cope.

At Ecology, we know that resilient communities are integral to climate adaptation. Much of our lending is targeted at supporting community-led solutions to the provision of affordable, low-energy homes for local people.

These groups are often formed when people become frustrated at being trapped in a cycle of poor-quality homes with high rents and sub-standard energy performance.

Because they sit outside the normal criteria of mainstream banks, community-led projects can struggle to get mortgages – despite having a sound financial plan as well as a potentially life changing mission that fits with wider net zero goals.

Through our support for community-led groups, Ecology has become a leading advocate of democratic and locally rooted housing, supporting some of the UK’s most innovative and inspiring low-impact communities and co-operatives.

We want to see more recognition and on-the-ground support for community-led responses to the climate crisis and the net zero transition.

Often, communities are the best architects of their own solutions, and these will differ according to the opportunities, constraints and unique experiences that define them. What we need is the long-term policy and financial support to empower all communities to put their solutions into action.

3. Making finance flows a reality

Harnessing the force of finance is essential to achieving net zero. This means redirecting capital from activities that are part of the problem to those that will help us to adapt to and limit climate change, as well as ensuring that money is directed towards those whose lives are most impacted.

Despite its flaws, the Glasgow Climate Pact, and its commitment to redirect investment in fossil fuels towards greener technologies, remains a significant achievement.

Collaboration is essential here; only when all financial organisations commit to becoming net zero in their financed emissions (the carbon released by the activities they fund) – and when wider systemic changes prioritise a clean-energy future – will the flow of money into new oil, gas and coal be shut off.

Ecology is proud to be leading the way; in 2021 we became the first building society to publish the carbon footprint of our residential mortgage lending.

COP26 also saw the creation of the Glasgow Alliance for Net Zero (GFANZ), a global coalition of financial institutions committed to net zero by 2050, of which Ecology is a member.

The Alliance is calling on its 500 members, including some of the world’s biggest banks, to publish intermediate 2030 net zero targets to ensure that they are on track to achieve 2050 goals.

We have recently published our own 2030 targets and see GFANZ as providing essential momentum in the mobilisation and accountability of finance in the low-carbon transition.

4 Achieving a just transition

The move to net zero represents huge opportunities; we have the chance to make our homes, communities and economies more resilient and to safeguard a flourishing natural world, all while unleashing a new era of job opportunities in green energy, finance, construction and more.

At the heart of making a just transition a reality is the necessity that we leave no one behind. It is within all our interests to ensure that those who are the most vulnerable are at the centre of conversations and decision-making. We each have a responsibility, whether as individuals or organisations, to use our voice to speak up for what we believe to be right.

At Ecology, we see agitating for positive change as one of our key roles and our members tell us that they expect us to be using our influence for good.

By championing the cause for community-led housing, low-impact building and affordable homes, we aim to embed ‘people, planet and prosperity’ at the heart of net zero action.

A time for courage

Four goals, four opportunities. As delegates gather in Egypt’s Sharm El Sheikh, we at Ecology will be continuing our day-to-day work, helping greener homes and communities to become a reality.

We were founded by a small group of committed individuals who dared to do something different and to put their vision of a better future into action.

Now, as we wait to see whether COP27 will be the catalyst for the meaningful action that is so desperately needed, we hope that the same spirit of courage and collaboration will prevail.

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