Ethical Mortgages
Some of the major changes in the mortgage industry came about with the demutualisation of the building societies – we now have a situation where only one out of five mortgages are provided by building societies, with the rest offered by bank, life insurers and specialist mortgage lenders.
A mortgage, for the average person on the street, is likely to be the single biggest outlay they’ll make during their lifetime. Therefore, as a matter of principle when considering which bank with whom to trust your future financial wellbeing it is worth your while to find out about the activities of the bank/building society.
Surprisingly ethical policies are few and far between when it comes to banks. This is actually because people in general are less concerned with whom they borrow from than who they invest in. Building societies who used to invest in housing only have, since demutualisation, become much more like banks in their investing policies.
Who can you go to for an ethical mortgage? By this we don’t mean that they’ll be lending you a house carved out of a giant redwood….
The Co-operative Bank. This bank makes an annual donation to Climate Care to offset around 20% of an average home’s carbon dioxide production for every mortgage granted. If you’re not aware of the activities of Climate Care, what they do is try to combat global warming by activities such as reforestation, the promotion of renewable energy and energy efficiency projects. The Co-operative Bank’s eco-mortgage is helping to fund new woodlands that are being created in Uganda. As the Co-operative bank has an ethical policy, this means that it will not invest in companies that are involved in repeated damage to the environment, nor will it invest in companies that “as their core activity relies on the extraction or production of fossil fuels, the manufacture of unnatural chemicals which may contribute to problems such as ozone depletion or the unsustainable harvest of natural resources such as timber clearance, which leads to deforestation.”
Norwich and Peterborough Building Society. This building society offers green mortgage products available for new homes with a Standard Assessment Procedure rating of 80 or more in respect of a property that the borrower wants to make more energy efficient. They will also plant eight trees for the first five years of every green mortgage, with the aim of making the home ‘carbon neutral’ whereby the estimated absorption rate of CO2 by the new trees offsets the estimated emissions of the house. They also work with an organisation known as Future Forests Ltd which aims to help offset the damage done to the environment by businesses and individuals again by planting and maintaining new forests or helping to cultivate expansion of existing forests. However, schemes such as this have been heavily criticized byorganizations such as Green Peace and Friends of the Earth due to the fact they are deemed inneffactive in the real fight against climate change. Norwich and Peterborough also offer what they term a “brown mortgage” which comes with a free energy survey and subsequent advice on making your home more energy efficient.
The Ecology Building Society is a mutual building society which promotes sustainable housing and sustainable communities. Mortgages will only be provided to those whose housing plans can be proven to benefit the environment – so that would include energy efficient housing, ecological renovation, derelict and dilapidated properties and small-scale and ecological enterprise. Borrowers do not have to be ‘green’ to get an Ecology mortgage – many of its borrowers have environmental concerns while others simply want to rescue a derelict property to make into their home.
Triodos Bank is individual in the way that it only invests in, sustainable, ethical organisations which impact positively on people and the planet. Unlike other commercial banks, they release all their annual figures details of who exactly they lend too. They invest in a variety of projects ,such as; the Triodos Renewables Europe Fund, which is involved in the development of new sources of European renewable energy and The Solar Investment Fund which assists with solar enegy projects in many developing countries.
Useful links – http://www.yourethicalmoney.org/mortgages/