Twinn climate risk data featured in UK mortgage lender annual reporting

HSBC wins award for credit risk excellence

For the partnership with HSBC, we provided a tailored version of Hometrack’s Climate Risk Analysis tool to meet the bank’s specific requirements. That tool went on to win Best Use of Technology at the Credit Awards 2021.

In its 2022 annual report, HSBC discussed how they “measure climate risk using third-party data in our most material mortgage market, which is the UK, where the primary physical risk facing properties is flooding.”

Using Hometrack/Twinn data, they reported that, “on a total value basis, and at present day risk levels, 3.5% of the UK retail mortgage portfolio is at high risk of flooding, and 0.2% is at a very high risk. This is based on approximately 93% coverage by value of our portfolio at the end of September 2022, and is reliant on flood data provided by Ambiental Risk Analytics.”

Virgin Money gains greater control over climate change risk

Virgin Money is using Hometrack’s Climate Risk Analysis tool to gain an increased understanding of the impact of climate change on its mortgage portfolio. Mark Thundercliffe, Chief Risk Officer at Virgin Money, summed it up by saying it allows them to “better understand the risks and opportunities in the current market while also planning accordingly for the future.”

In its 2022 annual report, Virgin Money explained how, with Hometrack’s tool, their “data capability has been enhanced to further profile physical and transitional climate-related risk against the Group’s lending portfolio.”

With the help of Hometrack/Twinn data, Virgin Money’s “inaugural climate scenario analysis was completed in FY22 to assess possible future climate-related risks and exposures that may impact the Group. The analysis also enhances our ability to identify climate-related opportunities, and to assess the resilience of our business model. Climate factors have been incorporated into a suite of key risk indicators which monitor risk against appetite set by the wider Climate Risk Policy Framework.”

Virgin Money was able to include a map illustrating potential flood risk for retail mortgage customers in the report. Their analysis found that, “on a total volume basis, retail mortgages at high risk of flooding are 3% of the portfolio and those at very high risk are 1% of the portfolio.”

Coventry Building Society increases insight on climate risk

Coventry Building Society is also using Hometrack’s Climate Risk Analysis tool to better understand the potential impact of climate change on its existing portfolio and new lending. Neil Wilson, Head of Retail Credit Risk at Coventry Building Society, described how it allows them “to better understand the potential climate risks that we and our members may face.”

Coventry Building Society has since used the Hometrack/Twinn data to inform its Climate Action Plan 2021-2023 and in its 2022 annual report. The report stated:

“The Society modelled the impacts of a range of Representative Concentration Pathway (RCP) levels on its portfolio, over short-, medium- and long-term horizons spanning from 2025 to 2080…Our analysis has concluded that the Society does not have a material exposure to the physical impacts of climate change, even under severe and long-term modelling.

Leeds Building Society quantifies climate risk profiles for 3 key scenarios

Leeds Building Society, the UK’s fifth biggest mutual, is using Hometrack’s Climate Risk Analysis tool to “gain invaluable insights into the emerging impacts that climate change could have on our business” and to help “shape our climate risk management framework and response plans,” according to Risk Director Andrew Mellor.

For the second year running, Leeds Building Society has used Hometrack/Twinn data as part of the climate-related financial disclosures in its annual report. For the 2022 report, they analysed climate pathways modelled over the coming 30 years and found “limited potential exposure to physical risk.” They were able to include charts illustrating flood, coastal erosion and ground hazard risk profiles for late policy action (LPA), early policy action (EPA) and no policy action (NPA) scenarios.