At Snugg, we’re committed to sparking meaningful conversations about how to advance the home energy efficiency sector and grow homeowner demand for retrofit solutions. One key aspect we focus on is the need for stronger collaboration between retrofit advice platforms and the financial sector.

In October 2024, we convened a roundtable with a lineup of leaders from banks, building societies, consumer advice organisations and the public sector. Our aim? To dive deep into the challenges and opportunities at the intersection of finance and home energy efficiency.

Why this matters

Upgrading homes to make them more energy-efficient plays a significant role in achieving net-zero carbon emissions. However, to make retrofitting widespread, the finance sector needs to support and incentivise homeowners. From ‘green mortgage’ products that reward energy efficiency to savings accounts tailored for home upgrades, collaboration between financial institutions and retrofit advice platforms is essential.

Here are some of the key themes and takeaways from our roundtable discussion...

Challenges in financing energy efficiency

During the roundtable, several industry challenges were raised and discussed that participants believed were currently limiting progress. Here are the key challenges:

1. ‍Engaging with homeowners too late: Financial institutions have been experimenting with ways to communicate the benefits of energy efficiency. But the fundamental obstacle is engaging homeowners at the right time in their home-upgrade journey. Lenders struggle to capture the interest of homeowners before they start planning projects, which limits the impact of available financial incentives. For meaningful progress, we must collectively think of ways of how to reach and educate customers earlier on in the process. ‍
2. Low demand for green finance products: While the number of green finance products has grown over recent years, uptake remains low. Many homeowners still see retrofitting as complex and costly, reducing appetite for borrowing or saving money to make their homes more sustainable. As a sector, we need to simplify communication, showcase tangible benefits and make green finance feel accessible and relevant. ‍
3. Competing internal priorities for financial institutions: Sustainability is a major focus for many banks and building societies, but sustainability and product teams often face competition for resources and budget within their organisations. Balancing the urgency of climate action with other business needs can make it difficult for sustainability initiatives to take precedence. This internal competition slows down the rollout and innovation of impactful ‘green’ solutions.

Opportunities for the future

Despite these challenges, our roundtable also surfaced exciting opportunities for future collaboration. Here are some of the ideas that emerged: ‍

• ‍Improving education and awareness: To boost demand, we must simplify home retrofitting and highlight its benefits. Clear, consistent advice is crucial. Collaborations between financial institutions and digital advisory services can improve communication, such as directing customers to resources during sales or through online banking. Lenders should also inform customers about grants and support options and provide additional funding where applicable. ‍
• Incentivising early action: Lenders could explore ways to communicate with homeowners about energy efficiency earlier on in the journey. Collaborations that align financial incentives with green home improvements could have a powerful ripple effect. ‍
• Developing new products: The focus so far has been on products that incentivise borrowing. While these products are important and lenders should continue to develop them, there is a notable gap around savings products. Introducing ‘green savings’ products that incentivise using deposits to fund energy efficiency projects could help address this gap. ‍
• Improved data sharing: Developing data-sharing frameworks between banks, utilities, public sector institutions and retrofit platforms can help all sectors make more informed decisions and deliver improved services. ‍
• Cross-sector collaboration: Building societies, in particular, are well positioned to establish collaborations with local and regional authorities. These authorities have already invested significant resources into engaging with consumers and stimulating demand for retrofitting. By partnering with them, lenders can leverage these existing efforts to drive greater awareness and uptake of energy-efficient home improvements.

The path towards sustainable homes

The discussion at our roundtable left us hopeful. There was a clear consensus that collaboration across sectors isn’t just beneficial but essential to unlocking the full potential of energy efficient home upgrades. By working together, we can create an ecosystem that supports and actively encourages homeowners to make greener, smarter choices for their properties.

At Snugg, we’re committed to driving these conversations forward and creating partnerships that make a real difference. As the green finance landscape evolves, we’ll continue to work with lenders to create solutions that simplify the path to a sustainable future.

Stay tuned for more insights from Snugg as we work to transform the way we think about home energy efficiency and finance.