Save money, save the earth

Paul Gosling continues his series on ethical investments with a look at eco-friendly loans

While politicians meet in Kyoto, Japan, to decide how to combat global warming, savers and borrowers in Britain can do their bit to help the environment.

They can invest in Triodos Bank and the Ecology Building Society knowing their money will finance renewable energy or energy conservation. The Ecology has launched remortgage loans to make home improvements to cut energy use.

When the Ecology was founded in 1981 it restricted lending to a narrow range of ecologically sound investments, such as mortgages for old homes that were costly to renovate, hard to mortgage elsewhere and would otherwise fall derelict. It was one of few societies keen to mortgage back-to-back terraces, which are highly energy-efficient.

Last year the Ecology had to turn away investments when it was inundated by new investors scenting windfall payments, and more money came in than it could lend. This led it to launch new "earthsaver mortgages" for existing members who want to move their loans. Applicants must have their property surveyed for an energy rating and agree to bring it to an 80 per cent standard of energy efficiency.

Paul Ellis, chief executive of the Ecology, believes the new investors were misguided as his society is perhaps the least likely to convert. "We are in a much stronger position than most because of our link with our members and their philosophy."

Mr Ellis says the "earthsaver mortgage" conforms to the Ecology's principles. "It is aimed at our existing members, a lot of whom want to move their mortgages to us. This new initiative is designed to achieve two objectives: to satisfy the demand from investing members to place their mortgage with an ethical institution, and to make an impact on the energy efficiency of properties where full-scale renovation is not called for. The energy rating mechanism gives us a way to ensure that the green content of the lending is maintained."

Recently approved Ecology loans, using its traditional criteria, include: a housing co-operative run by workers at the Centre for Alternative Technology to test "green living" ideas; the renovation of a number of listed properties; building of new energy-efficient housing; improvements to a bungalow on an organic smallholding; and buying a building in Cumbria for conversion into a walkers' hostel.

Only existing members of Ecology can apply for remortgages, but anyone can apply for a mortgage to buy an ecologically sound property. Ecology's current residential mortgage rate is 7.75 per cent. The society has instituted restrictions on new savers, and only members of environmental organisations such as Greenpeace, Friends of the Earth or the Green Party can join. Its instant access savings account pays a variable rate of interest of between 3.85 per cent and 4.35 per cent on deposits of pounds 500 and more. The society has a Tessa, which pays 6.25 per cent.

Triodos Bank has also revised its products. In the past two years it has launched four partnership accounts, each targeted at a good cause. One is the "earth saver account", in partnership with Friends of the Earth. Deposits are loaned to support renewable energy generation, such as wind and solar power, and for energy conservation.

The other Triodos partnership accounts are: an "organic saver account", with the Soil Association, which funds organic farms and market gardens; the "just housing account", with the Churches National Housing Coalition, with deposits loaned to housing co-operatives and social housing schemes; and the "north south plan", which finances small loans, called micro-credits, for poor entrepreneurs, mostly women, in the developing world. Depositors who want their money loaned to other good causes can arrange this.

Interest rates on the four accounts vary. Rates for deposits of pounds 5,000 on 33-day notice withdrawal accounts are 5.5 per cent for the organic and earth saver accounts, 4.25 per cent for the north south plan, and 4 per cent for the just housing account. Savings accounts are available in each with one-day, 33-day or 180-day notice withdrawal, except for the north south plan which has 33- or 90-day options. Triodos has a Tessa, now paying 7.25 per cent.

Triodos does not offer personal current accounts (it has no cash withdrawal facilities) but cheque accounts are available for charities and social businesses. The north south account is popular with international charities. Triodos is based in the Netherlands, and took over the small British Mercury Provident bank two years ago.

q Contacts: Ecology Building Society, 01535 635933; Triodos Bank, 0117 973 9339.

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