Environment, Social and Governance (ESG) is something you will probably have heard an increasing amount about in recent times.
Certainly, from our perspective, it has been on the radar and slowly moving up the agenda. over the last couple of years. In particular institutional investors are ever more mandated to include ESG in their investment policies. This means in some instances only assets with creditable green credentials would make suitable investment. I can think of no other area on which we have been quizzed more.
In that sense, you can probably understand its growing importance. Just recently, I read that Global ESG assets are likely to exceed $53 trillion by the year 2025. Against this backdrop one can understand why more and more is being done in this area, and why both individuals and firms are going to need to take their ESG responsibilities more and more seriously in the future.
That future has already started, and just recently we at Fleet published a new ESG policy looking at these three key areas, working out what we wanted to achieve and how we would go about meeting those outcomes.
Now, I appreciate this might seem a little daunting so it’s perhaps important to break it down into its constituent parts, and over the course of three articles here, I’ll do that, starting with the Environment (the “E” in ESG).
Firstly, what is Fleet doing to make a positive contribution to the environment? Well, we’ve chosen our starting points and from that the progressive and measurable outcomes we will pursue. For instance, we of course recognise that climate change is real and we have a responsibility to minimise the impact our business has on the environment. Without this belief, progress is futile.
We have adopted a ‘reduce, reuse, recycle’ culture to do that and are taking five specific steps including: reducing the amount carbon emissions caused by travel, reducing the electricity we use, reducing our printing/postage/stationary and waste disposal, recycling more and different types of waste, and introducing mortgage products that encourage landlords to make their properties more energy-efficient. These practical steps require creativity when one is aiming to grow the business simultaneously.
Our parent, Starling Bank, also recently outlined how it will offset its annual emissions through buying certified carbon ‘credits’ in eight carbon capture projects including two from Carbon Footprint. One of these plants trees in both the UK and the Amazon rainforest, while the other works to legally protect the Keo Seima Sanctuary in Cambodia.
Of course, the mortgage market is made up of lots of smaller-sized firms and projects on this scale might seem out of reach. However, that’s not really the case and every individual employee and every firm can still do their ‘bit’. Plus, you can encourage larger organisations of which you may be part, to lead in this area.
For example, in terms of positive action from firms, I recently saw that the network, JLM Mortgage Services, are now offering a Carbon Neutral house-buying process to all its purchase clients. Essentially, they have worked out the carbon emissions involved in every single house purchase the network completes, including that of the adviser/lender/solicitor/surveyor, etc, and are offsetting it (and more) via a body called Carbon Neutral Britain. Actions like this should inspire others to do more.
Carbon Neutral Britain works to help businesses and individuals reduce their emissions and again works on certified projects in the UK and around the world to reduce the amount of CO² in the Earth’s atmosphere.
Here is an opportunity to combine individual action within the firm, and for the firm itself to put in place policies for employees to follow. For example, we have staff working from home which means less travel, but we also encourage car-sharing for those coming into the office, and where possible using video conference facilities for meetings rather than business travel.
It can mean only using energy-efficient lighting in the office, or be as simple as turning off computers at the end of the day; it can be cutting the amount of money spent on printing and postage or upping the number of recycle points in the office.
Every individual and firm should have a starting point of what they currently achieve, where they want to get to, the means by which they plan to do this, and the measurements they will take along the way to ensure they reach their end goal and over what timescale. Every single one of us and every single firm should be able to minimise the impact we have on the environment – there’s no time like the present to start.
Jannie Vermeulen is co-founder & chief risk officer at Fleet Mortgages
