Report

The State of the Climate Transition for UK Mortgage Lenders in 2024 

Analysis of the top 85 lender climate transition plans and survey results from ESG teams, providing much-needed context on how lenders are approaching climate action

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How does your climate plan compare to the market?

Insight on best practice from 85 publicly published mortgage lender climate plans and actions

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Want actionable steps on how to improve your climate plan?

A personalised assessment of your climate plan across five key areas of analysis, with steps on how to improve

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Are you a small to mid-sized lender getting started with transition planning?

Learn how small teams can make quick and affordable decarbonisation decisions, and meet regulatory standards

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Climate leading lenders

The top 5 climate-leading lenders in the UK

Based on our analysis, the top 5 lenders in the UK are: Nationwide, Ecology BS, Handelsbanken, OSB, and Lloyds Bank.
 
They’re set apart by their detailed climate plans, robust and transparent financed emissions calculations for the mortgage portfolio, data-driven targets for decarbonising mortgaged homes, retrofit-focused action plans, and evidence of actions already being well underway. 
Planning

Lenders are only just at the starting blocks on climate

Kamma’s analysis has identified that while 59% of the market are reporting on climate in some capacity, just 5% of the transition plans are aligned with the Transition Plan Taskforce’s (TPT) best practice framework. 
 
This means that 41% of the market are not reporting on climate at all. With climate transition plans firmly on the policy agenda, this represents real risk for ESG teams. 
Emissions Data

Data quality is the #1 challenge cited by lenders

93% of survey respondents chose data quality as one of the biggest barriers to climate transition planning for their company – and this is evident from plans, with the average PCAF score across the lenders analysed coming in at 3.5. 
 
The issues with emissions data for UK housing are well documented, with EPCs an incomplete and unreliable data source. In fact, our analysis highlights that the average mortgage portfolio is missing EPC data for 35% of assets.
SCENARIO ANALYSIS

Most lenders haven’t figured out how best to quantify the role of external dependencies (especially policy)

Lender plans consistently reference the role of government policy to decarbonise the National Grid and enforce minimum energy efficiency standards. In fact, 87% of our survey respondents highlighted external dependencies that lie outside of the control of the lender as a major challenge in climate transition planning.

However, only a quarter of lenders have successfully quantified the actual impact of these policies on the decarbonisation pathway for their mortgage portfolio, which is absolutely vital information to support lenders to reach their climate targets.

Retrofit action

Action to drive retrofit amongst mortgage customers is slow

Mortgage lenders have a close relationship with homeowners, meaning they are a key channel for both education on energy efficiency improvements and financing products to help homeowners with retrofit costs.

However, only 39% of lenders currently include retrofit education and 44% retrofit financing in their climate transition plan as a way to drive decarbonisation of the mortgage portfolio.

Keep reading Kamma's 2024 Mortgage Lender Climate Transition report

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How does Kamma help?

Kamma works with mortgage lenders to drive the built environment to Net Zero. We combine world-leading data collection and address matching with insightful analysis to articulate the fastest and most cost-effective decarbonisation strategies. We ensure regulatory compliance, manage risk, identify green growth opportunities and qualify green assets.

Contact us now to find out more about how Kamma can support your business to manage, de-risk and decarbonise property-related assets.