Sustainability is no longer a “nice to have” for Building Societies; it is a critical component to future-proofing the Modern Mutual. With the UK accelerating towards Net Zero 2050, lenders face mounting regulatory pressure to take action. Frameworks like TCFD already mandate emissions reporting, and the upcoming 2025 Sustainability Reporting Standards (SRS) will raise the bar even further.
Societies also face rising expectations from their members, as customer expectations evolve. More than half (53%) of respondents aged 18-34 want more sustainability support from their financial provider, while 68% of homeowners and 87% of landlords now seek mortgage support for home’s energy efficiency.
But this isn’t just about meeting demand – it’s an opportunity. By partnering with Fintechs, Societies can accelerate their sustainability journey.
What Does It Mean to Be Sustainable?
Darren Garner, Chief Financial Officer at Newbury Building Society, defines sustainability across three key pillars: “Financial sustainability, sustainability within the organisation, and the sustainability of your financed emissions.”
While reducing internal emissions (Scope 1 and 2), such as switching to renewable energy or minimising waste, is important, the real challenge lies in managing and ultimately reducing financed emissions (Scope 3). For Societies, this means tackling emissions from properties within their mortgage portfolios.
Holding 24% of the UK’s outstanding mortgage market, Societies are uniquely positioned to drive climate action. With housing stock responsible for 26% of the UK’s total carbon emissions, their influence in the mortgage market makes it crucial to prioritise efforts that cut financed emissions.
But how can Societies empower members to reduce home emissions, whilst improving their own environmental impact? SHIFT advocates a three-pronged approach, leveraging the expertise, agility and scalability of Fintech solutions.
- Creating a behavioural bias for action
- Providing access to high-quality information
- Managing exposure to climate risks
Creating a Behavioural Bias for Action
Fintechs like Eliq and Cogo specialise in turning awareness into action – an especially important step in guiding a customer towards sustainable behaviour and breaking away from the status quo.
Eliq leverages Smart Meter data to track energy use, translating insights into actionable energy-saving tips. These practical insights, powered by machine learning, include recommended home upgrades such as a smart thermostat, as well as integrated journeys to green loans for renovations, such as solar panels. This real-time approach allows Societies to offer green mortgage products with rate reductions based on actual efficiency, rather than outdated EPC ratings. Similar to how black boxes improved car insurance assessments, Eliq’s technology enables precise, data-driven outcomes, with 91% of customers using Eliq changing to more sustainable behaviours.
Cogo empowers customers and businesses to take meaningful climate action through real-time carbon tracking embedded directly into their banking apps. By analysing current account transaction data, either directly or through Open Banking, and applying behavioural science principles, Cogo bridges the gap between “carbon literacy and carbon action,” using education, personalisation, and behavioural nudges to create a lasting impact. They are currently working with Cumberland Building Society and Skipton Business Finance, as well as a range of banks.
Providing access to high-quality information
Fintechs like Propflo and Snugg are also transforming how Societies engage members on sustainability. By offering detailed, personalised insights and practical solutions, they support members in taking further meaningful steps toward energy efficiency.
Propflo delivers tailored retrofitting insights, highlighting efficiency gains, costs, and savings. Once members choose an option, Propflo presents them with trusted local installers, simplifying the process through its “retrofit-as-a-service” model. Several lenders, including Molo, are partnering with Propflo’s GreenVal tool to offer landlords personalised energy efficiency insights, helping them meet the government’s future EPC C standards for rental properties.
Snugg takes a similar approach to simplifying the retrofitting process for homeowners. Snugg is live at Scottish Building Society and Yorkshire Building Society, integrating directly into their member communications and offering a platform that allows users to build personalised energy-saving plans with just their postcode. From there, users can connect with installers, explore finance options, and receive ongoing support. This user-centric experience removes friction, making it easier for members to embrace sustainability.
Lawrence Chan, Head of Savings Strategy at Furness Building Society, highlights, “Members need to understand how best green products benefit them before engaging with them.” Education must come before consumer adoption. By partnering with Fintechs like Propflo and Snugg, Societies can meet this need, equipping members with both the knowledge and tools to cut home emissions.
Managing Exposure to Climate Risks
While member engagement is crucial, Societies must also manage their exposure to climate risks – both physical (e.g., flooding) and transition risks (e.g., tightening regulations and shifting market expectations). With the FCA and PRA making climate disclosures a requirement, sustainability is no longer a voluntary commitment. Effective risk management demands robust emissions data but gathering it can be costly and complex without the right tools.
Fintechs like CRIF offer a solution. Their ESG data lake, built from over 130 KPIs, draws on institutional, academic, and proprietary sources to provide Societies with a clear understanding of their risk exposure. CRIF’s platform automates physical risk assessments, such as flood exposure across mortgage books, while evaluating transition risks, including sustainability scores for third-party suppliers and Scope 1, 2, and 3 emissions calculations.
The Road Ahead
For Societies, the path to sustainability requires more than regulatory compliance. It demands a proactive approach that integrates sustainability into operations and enhances member offerings. Societies will need to educate members on the impact of their actions and empower more eco-behaviour through a bias for action, benefitting not only the planet but also their pockets in the long run.
As the financial landscape evolves, sustainability will remain a key differentiator, and this is especially the case in light of changing demographics and demands. As Societies seek to future-proof their business, Fintech partnerships provide a cost-effective way to accelerate this transformation, enabling Societies to meet sustainability goals while strengthening member relationships. The Modern Mutual must not only embrace change but lead by example, proving that profitability and sustainability are not opposing forces but complementary strengths.
Note: This article highlights just a selection of the many innovative Fintechs driving sustainability in the sector. Due to conciseness, several impactful solutions have not been mentioned. Interested in exploring additional Fintechs that can support your sustainability initiatives, please reach out to SHIFT at jamie.dawood@shiftopenfinance.com.
By Simon Cherry and Jamie Dawood
