Eco-friendly finance going green

One of the challenges mankind faces now is to prevent the degradation of the environment, and people are increasingly becoming aware that they could use their consumer power to help make these changes.

Financial providers have taken a measure of the mood for environmentally friendly products and have responded with their own green offerings.

Credit card providers who are notoriously eager to cash in on consumer trends have jumped on the green bandwagon.

In the past week both Barclaycard and Virgin launched a green card with Virgin claiming to have outdone Barclaycard, announcing a bio-degradable card instead of an easily recyclable one.

Meanwhile, the launch of Barclaycard’s Breathe credit card saw the company claim that 50 per cent of its profits would go to funding environmental projects, while other cards have been known to pay a portion of every purchase as a donation.

But using cards to go green is not right for everybody.

Sandra Quinn, of credit card payment association Apacs, said: “If you use your card a lot… some [cards] pay a proportion of everything you buy as a donation to a charity. So if you put a lot on your card, it’s an excellent way of donating to charity at no cost to yourself.

“But as a customer you have to be aware that a lot of these cards don’t come on the nought per cent balance transfers that you get from lots of other products. So they’re probably most suitable for people who pay off in full every month anyway.”

She added that people who are committed to the green cause could find better uses for their money.

The massive market for mortgages has recently seen the inclusion of green mortages to the deals on offer. Both the Co-operative Bank and the Norwich and Peterborough building society claim to have started the trend which is still small, but is set to take off, according to experts.

Although green products are highly publicised the attention they get is disproportionate to the amount of products actually on offer. Green mortgages are still quite a niche market and have yet to be broadly adopted either by providers or borrowers.

Andy Hammerton of the Co-operative Bank said: “There is going to be a response from financial institutions to try to help home owners to lower their carbon emissions. I’m sure we’ll see innovation around that.

“Generally, people don’t want to pay more for the privilege. At the end of the day you don’t want to pay more on your mortgage just because it does more for the environment.”

However, he added that the real reason that people are not taking up the green mortgages, is that there are simply not enough on the market.

That could change though, as two government initiatives designed to reduce carbon emissions by 2050 come into force.

Gordon Brown used the Budget to introduce a stamp duty exemption for zero-carbon homes, which will provide motivation for people to make their houses more ecologically friendly by making improvements funded by green mortgages or extension loans like the one offered by the Yorkshire Building Society.

And on June 1st, Home Information Packs (Hips) will become a compulsory part of any sale. So sellers will be aware that energy efficient homes are cheaper to run and will know that their house can shine green in the Hip if they make home improvements.