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CHALLENGE: How do you green the UK’s homes?

Buildings represent around 20% of UK carbon emissions. That makes ‘greening’ the nation’s homes and offices an essential step in hitting net zero targets and achieving a low carbon future.

NatWest has a target of halving the carbon impact of its lending by 2030. It recognises that reducing emissions from the UK’s buildings has a big part to play in that, with mortgages and real estate lending representing a significant proportion of the emissions on its balance sheet. “We’re one of the biggest mortgage lenders in the country, helping just over a million customers own their homes,” says Lloyd Cochrane, Head of Mortgages at NatWest. “Helping them understand what they can do to make their homes more energy efficient and reduce the emissions that come from their homes is a really important step to helping the UK get to net zero.”

The bank also recognises that greening the UK’s buildings will benefit its customers. Through improvements to the energy efficiency of their own homes, customers can lower their energy bills, and enhance their living environment.

The bank was clear about what it wanted to achieve – but also that this wouldn’t be a straightforward task. For a start, there’s the scale of the issue to factor in – there are 28 million homes in the UK. Then there’s the complexity – housing stock that dates from many different periods, with some of the oldest in Europe, and a wide range of property types.

INSIGHT: Convening diverse views to gain a fuller view of the issues

Recognising the scale of the problem, NatWest asked us to support it in putting together a vision and a project plan for tangible action. The first stage was a series of internal workshops with a range of C-suite leaders from across the group. “The discussions that KPMG facilitated were invaluable because they helped us structure our thinking and filter ideas down into a strategy,” says Lloyd Cochrane.

“The diversity of views from within the organisation meant we could stress-test different ideas before taking our approach into the outside world. It was an uncomfortable experience for me and other leaders in the bank to go outside of our comfort zone. But it worked thanks to the expertise and support KPMG brought to it.”

It was clear, however, that this was a challenge that needed collective action. It was going to take different views to get a full understanding of the hurdles and potential solutions. We helped the bank convene a coalition of organisations from key sectors to provide a more complete view of the issues and establish a stronger voice on greening homes.

“The Sustainable Homes and Building Coalition comes together to advocate for the kind of policy changes that are going to be required to enable the finance to flow to support the decarbonisation of the UK's housing stock,” says James Close.

The coalition was launched in July 2021, bringing together NatWest with British Gas from the energy sector, Worcester Bosch from heating/technology manufacturing, and homelessness charity Shelter for critical perspectives from broader society. Citizens Advice is also involved in an advisory capacity.

OPPORTUNITY: Building engagement and momentum with government, business and homeowners

The coalition has coalesced around three key aims:

  • Conduct research and map customer journeys to decarbonising their homes, recognising that solutions need to be accessible to all
  • Support energy-efficient start-ups and SMEs to scale
  • Accelerate the collaborative development of financial products which consumers can access, understand and use

The first phase of activity has already resulted in a significant practical outcome – the publication of a seminal report Home is where the heat is’ which offers timely insight, ideas and recommendations around a just transition to greener buildings.

The UK Home Office recognised the initiative as best practice and invited the coalition to present the report on World Leaders Day at COP26, during a panel chaired by KPMG.

Testing the recommendations in the real world

Today, the coalition is undertaking a pilot retrofit programme for a dozen homeowners who fit the 12 property archetypes outlined in the report. This will demonstrate what it takes to make the transition happen and the true challenges and opportunities facing the buildings sector in the UK.

“We need to make sure the customers really understand the benefits of going through this transition, particularly in time of higher energy costs,” says James Close. “Here, we can get to a point where there are more predictable and lower energy costs and energy consumption is reduced.”

“We have to act now,” adds Lloyd Cochrane. “The longer we delay this, the worse it gets for all of us. But if everyone acts collectively and plays a part, we can make a big difference to the future.”