Case study: How Yorkshire Building Society works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

Yorkshire Building Society has identified its key stakeholder groups as those who have an interest in or are affected by the Society’s activities. These include its members/customers, colleagues, government and regulators, investors, mortgage brokers, partners, and its communities. Yorkshire Building Society takes into account the needs of these groups when making decisions and have pinpointed significant ESG topics for each of them (refer to page 40 of its 2023 Annual Report and Accounts for more details on how Yorkshire Building Society engages with these stakeholders). Each group has contributed to identifying focal areas and enhancing Yorkshire Building Society’s responsible business performance over time, which has informed the PRB impact analysis.

In 2023, Yorkshire Building Society engaged several key stakeholder groups during its materiality assessment update to identify and prioritize critical ESG themes. Yorkshire Building Society conducted online surveys with over 1,900 stakeholders, including colleagues, members, potential customers, mortgage brokers, and potential employees. Additionally, Yorkshire Building Society held one-on-one interviews with up to 20 stakeholders and key opinion leaders, along with analysing the perspectives of investors and regulators. Important themes identified include responsible lending, financial resilience, and home ownership, while climate change emerged as the predominant environmental concern.

Yorkshire Building Society regularly consults with its members through its Annual General Meeting, a panel of 1,900 members known as My Voice, and other broader member groups. In 2023, Yorkshire Building Society gathered feedback from the My Voice panel regarding the competitiveness of its interest rates, membership rewards, its community investment initiatives, and intergenerational support.

Yorkshire Building Society’s colleagues are essential in shaping and enhancing its impact, contributing through specialized teams (e.g., mortgage and savings propositions, environmental sustainability, social purpose, and sustainability) and participating in broader consultations via forums, events, conferences, and research.

Yorkshire Building Society holds regular discussions with MPs and local government officials on various topics, including access to cash and maintaining a presence on the high street, as well as the Mortgage Charter and its housing report from the previous year. Meetings with its investors also occur, where they are informed about Yorkshire Building Society’s responsible business performance, partially through its non-financial ratings agency (NFRA) scores. In recent years, Yorkshire Building Society has engaged extensively with various NFRAs, such as MSCI, Sustainalytics, and S&P, to enhance transparency regarding its ESG initiatives and to understand the impact areas that are significant to them.

Yorkshire Building Society works with its suppliers to promote a more responsible supply chain through its Standards for Suppliers, which those companies providing goods and services to the Society must adhere to. Yorkshire Building Society’s partnerships with the Building Societies Association and Green Finance Institute aid it in understanding and engaging with the broader market landscape for savings and mortgage products.

Yorkshire Building Society’s community-focused initiatives across the country aim to help individuals improve their financial wellbeing through national partnerships with organizations like Citizen Advice, funding for local charities, and colleague volunteering to provide practical support.

How did Yorkshire Building Society work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 ESG Report Yorkshire Building Society reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Yorkshire Building Society promotes sustainable practices among its customers through a variety of products, policies, and programs. The Society aims to enhance its members’ financial wellbeing by offering a diverse range of savings accounts tailored to meet different needs. In 2023, Yorkshire Building Society provided an average of 1.01 percentage points more in interest compared to its peers, translating to approximately £441.1 million in additional value returned to its members. For further details on fostering good savings habits, please refer to Page 24 of Yorkshire Building Society’s ESG report.

Over the past year, Yorkshire Building Society has bolstered its support in improving financial capability by creating a dedicated cost of living advice page on its website and expanding its in-branch collaboration with Citizens Advice—an independent charity that offers confidential advice on various topics at no cost—to provide face-to-face assistance to the public. Yorkshire Building Society also continued its financial education and skills development programme, in person and online, which teaches young people about money management and prepares them for the workforce. More details on these and other financial wellbeing initiatives can be found on Pages 26–31 of Yorkshire Building Society’s ESG report.

The financial wellbeing products and programs offered by Yorkshire Building Society are supported by a strong policy framework. This includes its Product & Distribution Governance Policy, which ensures that the products available to customers are designed, distributed, and delivered to achieve positive customer outcomes. The Society is committed to acting in good faith towards retail customers, avoiding unforeseen harm, and empowering them to reach their financial goals. Yorkshire Building Society’s established responsible lending policy ensures that borrowers can afford to repay their mortgages throughout the term. The key principles of Yorkshire Building Society’s Retail & Commercial Lending Policy include:

• Compliance with all relevant regulations.
• Ensuring lending activities remain within the approved risk appetite.
• Implementing a structured design, review, and approval process to facilitate positive customer outcomes and mitigate potential detriment.
• Guaranteeing responsible, sustainable lending by conducting thorough affordability assessments and credit history checks to confirm customers can manage repayments sustainably.
• Ensuring all secured lending is adequately backed by acceptable property with an appropriate charge registered.
• Incorporating climate considerations into risk assessments, especially regarding potential financial risks related to climate change.
• Following the Vulnerable Customer Policy, which emphasizes achieving positive outcomes throughout the customer journey and removing barriers to accessing Yorkshire Building Society’s products and services, particularly for vulnerable customers.

The effectiveness of this lending policy, along with Yorkshire Building Society’s Retail Collections & Recoveries Policy—committed to supporting customers experiencing financial difficulty with their mortgages, including those not yet in arrears—has resulted in a low arrears rate of 0.50% among customers who are more than three months behind on payments in 2023, compared to the market average of 0.94%.

Yorkshire Building Society also promotes environmental sustainability among its customer base and continues to develop a Net Zero transition plan aimed at supporting those at the highest risk of transition challenges. Yorkshire Building Society believes in a fair and equitable transition to a Net Zero economy and acknowledges the difficulties that many may encounter in achieving this goal.

Recognizing the need for timely and relevant information to assist customers on their journey to Net Zero, Yorkshire Building Society offers accessible solutions. Accordingly, Yorkshire Building Society has dedicated a section of its website to its climate commitment, featuring an online assessment tool developed in collaboration with the Energy Saving Trust, which provides free advice on reducing energy consumption. Since its launch in November 2022, over 2,500 users have utilized this tool to evaluate potential home energy efficiency improvements. In 2024, Yorkshire Building Society plans to enhance the information available to its customers on this topic through its website and social media efforts, aimed at understanding what information its customers find most valuable. Yorkshire Building Society also maintains a defined Environmental and Climate Change Risk Policy that governs all aspects of the Society’s environmental and climate change strategy commitments, aligning with both legislative and non-legislative requirements and targets.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by Yorkshire Building Society, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.ybs.co.uk/your-society/reports

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