More than 30 organisations from the private and public sectors have joined a new initiative aimed at helping to finance the retrofitting of homes across the UK for energy efficiency.
The Coalition for the Energy Efficiency of Buildings (CEEB) has been launched by the Green Finance Institute, a green funding-focused body backed by the government and the City of London Corporation.
The coalition’s goal is to create a market for financing net-zero carbon and climate-resilient residential buildings. Companies signed up include BNP Paribas, E.on, Eversheds Sutherland, Legal & General, RICS and Transport for London. Other parties involved include thinktank E3G, which is acting as secretariat.
Launching the coalition at the COP25 climate change conference in Madrid, Rhian-Mari Thomas, chief executive of Green Finance Institute and chair of CEEB, said the institute’s goal was to “harness [sector specialists and policymakers’] creativity to identify and overcome the barriers to the deployment of green funding”. The coalition, she added, will “accelerate capital flows towards retrofitting and developing UK homes to net-zero carbon, resilient standards”.
The coalition will spend the next year designing and launching what it calls a “portfolio” of new financial offerings that it says will “unlock investment into the low-carbon and resilient building sectors”.
As part of that, it will also oversee a review of the UK residential retrofit market to ensure the offerings work for all building tenures. The findings of that review will be published in spring 2020, while the first projects will be shown at the 2020 UN Climate Change Conference in Glasgow next December.
“Success for us will look like not just coming up with more well-considered, well-articulated reports, but having demonstrable projects financed,” Thomas told EG. “We know we have to do this, so why is the market finding it so difficult to actually channel capital in this direction?”
Part of the coalition’s work will be spreading a greater awareness of green finance opportunities for lenders, Thomas added.
“Everything to do with green finance is pretty nascent,” she said. “We’re having to come up with business cases that compel mainstream financial players to start pivoting away from the sorts of transactions they’re very familiar with, and that remain very profitable, towards this new market. That change is always difficult.”
Embracing change
But equally challenging will be ensuring there is demand for the kinds of financing and property improvements under scrutiny.
“The big elephant in the room is consumer demand,” Thomas said. “Personal lending has been at some of the cheapest rates, but householders aren’t taking out personal loans at the moment to retrofit their homes. We need to make sure this whole journey is made simple and straightforward for homeowners.”
Although the coalition is focused on the domestic market, Thomas said she hopes there will be lessons taught and learned in other countries.
“While this is looking at UK buildings, we’re not too proud to learn from other countries that have been trying to crack the code on this, and we’re also keen to share our own learning very openly with other partners in other countries,” she said. “It isn’t a parochial exercise. It’s focused on an issue we have in the UK but with an international flavour.”
Initial members of the coalition welcomed the launch. John Godfrey, corporate affairs director at Legal & General, said there is a growing recognition that “real estate asset values will become increasingly correlated with climate risk”, and that this underscores the need to improve building stock and “future-proof balance sheets”.
Paul Ellis, chief executive of coalition member Ecology Building Society, said: “The coalition needs to bring together, at pace, lenders and investors with the wider retrofit supply chain to urgently deliver tangible and practical solutions at scale if we are to avoid the catastrophic human and ecological impacts of the climate crisis.”
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