March is officially B Corp month! And this year, we\u2019re marking the occasion with a purpose-driven call to (climate) action for the entire mortgage industry\u2026<\/p>\n\n\n\n
For better or worse, Australia's financial sector is undeniably powerful. It has the capacity to shape the country's entire economic landscape, as well as influence the financial, and by extension overall<\/a>, wellbeing of millions of people and their families. Working in the industry comes with an enormous amount of responsibility, and while it can sometimes feel like there are many who set out to abuse this power and privilege<\/a> for personal gain, there\u2019s an ever-growing movement of people, businesses and institutions who are, instead, taking the responsibility seriously and to heart. Those who, through a purpose-driven transformation of their own business models and practices, are attempting to redefine the role that finance currently plays in our society by committing to harnessing its power and influence for good.<\/p>\n\n\n\n Enter: the B Corps. An over 7,800 strong global community of businesses that, via an independent, third party certification process, have committed themselves to striking a better balance between purpose, people, planet and profit. And while finance mightn't be the first industry that comes to mind when we talk about \u2018purpose driven\u2019 business, that enormous responsibility we spoke about earlier? Well, that\u2019s exactly the reason it should be.<\/p>\n\n\n\n As a purpose-driven mortgage brokerage<\/a>, and a B Corp ourselves<\/a>, we\u2019ve long been passionate about making the world of finance a more ethical and equitable place and harnessing the power of people\u2019s mortgages as a wellspring of opportunity to do good - for our clients, our community and our planet.<\/p>\n\n\n\n Over the years, we\u2019ve supported hundreds of people to better navigate the jargon-filled, greenwashed maze that is home loans and, wherever possible, helped guide them towards a loan that aligns with both their goals and their values. Through education and advocacy, we\u2019ve worked to combat the pervasive idea that ethical home loans are more expensive, more \u2018risky\u2019 or lower quality, diverting millions of dollars in loans away from fossil fuel exposed lenders. Additionally, via our impact giving commitment, we\u2019ve put almost $38,272 of our revenue<\/a> (and counting!) into the hands of grassroots climate activists and environmental organisations, all working tirelessly to safeguard our collective futures.<\/p>\n\n\n\n But what if the entire mortgage industry were to adopt a similar approach? We\u2019ve all heard the calls asking us to switch our superannuation and other investments to more ethical and sustainable institutions but, what about our mortgages? What kind of impact could be affected if, en masse, Australia\u2019s mortgage brokers decided to take up the fight for climate action and harness their significant power and influence in the home loan space, for good?<\/p>\n\n\n\n Well, let\u2019s take a look\u2026<\/p>\n\n\n\n It\u2019s no secret that property ownership is a big deal in Australia. Though, what was once recognised as a cornerstone of the \u2018Great Australian Dream\u2019 is fast becoming attainable only to those with a generous income or access to generational wealth - or both. (But, that\u2019s a conversation for another time\u2026)<\/p>\n\n\n\n Australia has one of the most expensive property markets in the world, with an annual salary of $293,578<\/a> now needed just to afford a home in Sydney\/Eora. What this also means is that, as a nation, we have a considerable amount of property related debt - some of the highest levels in the world.<\/a><\/p>\n\n\n\n In fact, residential mortgages are a significant investment for Australian banks, with the \u2018Big Four\u2019 major banks holding a diabolical 70%<\/a> of the mortgage market share. In 2023, the Commonwealth Bank of Australia (CBA) and Westpac Banking Corporation (Westpac) were the leading mortgage providers by value of gross mortgage lending and accounted for roughly 26 and 21 percent of gross mortgage lending respectively.<\/a> We think it\u2019s important to also highlight here that both CBA and Westpac are currently two of the most heavily fossil fuel-exposed banks<\/a> in Australia, with CBA\u2019s investments totalling $15.8 billion and Westpac\u2019s at $9 billion since 2016. Both banks loaned $267 million and $1.7 billion to fossil fuels, respectively, in 2022 alone.<\/p>\n\n\n\n Now, here\u2019s where things get interesting. For the 2024 June quarter, a staggering 73.7%<\/a> of all new residential home loans in Australia were originated by a mortgage broker, equating to $100.11 billion in loans. That\u2019s $100.11 BILLION in loans, in only one quarter. (See where we\u2019re going?...)<\/p>\n\n\n\n It\u2019s an eye-watering amount of money. But more importantly, it\u2019s also an incredible opportunity for positive climate action. Because if mortgage brokers were integrating a \u2018clean money\u2019 screening process alongside their pricing considerations with clients, then as an industry, we could potentially be using that $100.11 billion per quarter to send a message to the banking sector that is too loud (and too costly) for them to ignore: clean up your act, or people (with the help of their mortgage broker) will take their home loan business elsewhere.<\/p>\n\n\n\n According to the RIAA\u2019s 2023 From Values to Riches Report<\/a>, we can see that some of the top barriers people encounter when switching to an ethical bank are things like:<\/p>\n\n\n\n As luck would have it, there is actually a group of finance professionals who can help people navigate every single item on this list, free of charge. That\u2019s right - mortgage brokers. With an in-depth understanding of a range of different banks and loan products, a mortgage broker acts as an intermediary<\/a> between a borrower and the bank when they\u2019re applying for, or refinancing, a home loan.<\/p>\n\n\n\n Additionally, switching to a more ethical bank for your home loan isn't quite as simple as switching your everyday banking. There are a lot of variables that can come into play for borrowers (e.g., self-employed income niches, or buying a studio apartment, just to name a few) and depending on personal circumstances and purchasing goals, these variables can often dictate, or restrict, a borrower's loan options. But again, we think this is just another compelling reason as to why mortgage brokers are so perfectly placed to step into this activist role and play a more purposeful part in Australia\u2019s \u2018divestment for climate\u2019 movement. More and more, people expect the businesses they engage with to behave ethically and play a more meaningful role in creating the positive impact our world so desperately needs. And financial services are absolutely no exception.<\/p>\n\n\n\n As outlined in the RIAA\u2019s 2023 \u2018From Values to Riches\u2019 Report<\/a>, it\u2019s clear that Australians aspire to align their investments with their values and that, crucially, they are also prepared to switch providers if there is a misalignment. The report found that a massive 87% of Australians expect the money in their bank account to be invested responsibly and ethically (a 4% increase since 2022) and that having a super fund, bank or other investment that delivers positive impact in the world is important to 79% of people. The report also found that 76% of Australians would consider moving their super or other investments to another provider if their current fund didn\u2019t align with their own values.<\/p>\n\n\n\n However, respondents also reported that \u2018greenwashing\u2019<\/a> remains a significant issue for those passionate about making their finances more ethical, with 78% citing greenwashing as a concern, a figure 6% higher than in 2022. Worse still, greenwashing poses an even greater concern among individuals who would potentially start investing responsibly in future, with 80% of those looking to invest ethically in the next 5 years citing it as an issue.<\/p>\n\n\n\n The prevalence of greenwashing<\/a> in the finance sector, and the consumer mistrust it feeds, is undoubtedly a huge barrier to bringing the practice of ethical investment mainstream. But, how to tackle it? While the answer is, of course, complex and nuanced, there is one particular course of action that has been steadily gaining momentum in recent years. And the good news is that any financial institution, operating in any part of the sector, can pursue it themselves, right now. <\/p>\n\n\n\n That is: to seek the independent, third party certified, B Corp stamp of approval.<\/p>\n\n\n\n For an industry whose livelihood relies almost entirely on its perception of trust, we think B Corp certification is a no-brainer for any financial institution, especially those that are serious about \u2018doing better\u2019 and being accountable to their customers and community. Indeed, in the same RIAA report<\/a>, it was also found that 79% of Australians would be more likely to invest in funds or products that have been labelled as responsible\/ethical by an independent source.<\/p>\n\n\n\n We\u2019ve been B Corp certified since 2020<\/a> and have found the benefits in certification to be profound and far reaching - for our business, team and clients alike. And while our ultimate goal is for everyone to be able to access ethical, sustainably sourced home loan funding more broadly, having our own independently certified, purpose-led business model has allowed our clients to maintain a level of positive impact<\/a>, regardless of their lender choice, or until their circumstances permit them to make the more ethical switch.<\/p>\n\n\n\n Curious about some of Australia\u2019s other finance-y B Corps? You can search the B Corp directory here<\/a> but in the meantime, here are some of our personal favourites:<\/p>\n\n\n\n Bank Australia<\/a> \u2192 \/ Teachers Mutual Bank<\/a> \u2192 \/ Future Super<\/a> \u2192<\/p>\n\n\n\n For as long as we\u2019ve been doing this work, there have also been persistent myths surrounding ethical finance options, along with a perception that the major banks are somehow \u2018better\u2019 or \u2018safer\u2019. In reality, this isn't necessarily the case. The big four are often more expensive<\/a>, they routinely treat their customers terribly<\/a> and they seem to have little qualms about breaking some pretty big and important laws<\/a>. As highlighted previously, they are also more likely to be exposed to fossil fuels<\/a> and other \u2018dirty\u2019 extractive industries. One other thing they all have in common? Astronomical marketing budgets. Go figure.<\/p>\n\n\n\n Ethical banks are, of course, more likely to be \u2018divested\u2019 from harmful industries (like fossil fuels) and \u2018invested\u2019 in good ones. But in our experience, they are also more likely to treat their customers better, in both the short and long term. Most ethical banks will be customer-owned<\/a>, meaning that their profits are returned to customers - not shareholders. They are often just as competitive, if not more so, than their major bank counterparts and, even more interestingly, we are in the early stages of gathering our own data that would suggest they also keep their customers' loan costs lower, over a longer period of time. Which means, if you\u2019re looking for a home loan that\u2019s kinder to people, the planet and your wallet - then we\u2019re here to tell you that, actually, sometimes you can have it all.<\/p>\n\n\n\n One last thought here. As mortgage brokers, we are bound, by law<\/a>, to always act in the best interests of our clients. But, in the face of a rapidly changing climate and the unprecedented, unrelenting environmental disasters occuring as a result, how far should this concept of \u2018best interest\u2019 extend? And more importantly, who gets to decide what is, or isn\u2019t, part of the conversation?<\/p>\n\n\n\n As we speak, the government is seeking contributions and feedback on draft legislation<\/a> that would see mandatory climate-related financial reporting and disclosure obligations imposed on the finance industry. This important move would put us in step with a string of other countries<\/a>, who have either already passed legislation of their own, or are developing similar requirements.<\/p>\n\n\n\n So, with things already headed this way (legislatively speaking) the question remains: do we, as an industry, act now of our own volition, or do we continue with \u2018business as usual' and waste more of the precious time that we, and our planet, cannot afford to.<\/p>\n\n\n\n When it comes to mitigating the worst effects of our changing climate and ensuring we keep global temperatures within a range habitable for human life, our window of opportunity is closing rapidly. We must act decisively, dramatically and fast.<\/p>\n\n\n\n And while we\u2019re conscious of not conflating the importance of individual action over the deep and fundamental systemic change needed to bring about meaningful climate action, it\u2019s clear that this is a once-in-a-generation opportunity (and in our opinion, obligation) not to be missed by the mortgage broking industry. A chance to step up and lead an ethical banking revolution that would see our individual homes play a more influential role in the protection of our collective one - our planet.<\/p>\n\n\n\n If you\u2019re a mortgage broker, or you work in the industry in some capacity, and you\u2019d also like to see the industry do more for climate action and justice - we would love to hear from you! Send us an email via \u2192 info@purefinance.com.au<\/p>\n\n\n\n Any finance information provided in this article is general advice only and doesn't take into account your personal circumstances, needs or goals. You should always reach out to us, or seek professional advice, before acting on this information or making any other financial decisions.<\/p>\n","protected":false},"excerpt":{"rendered":" March is officially B Corp month! And this year, we\u2019re marking the occasion with a purpose-driven call to (climate) action for the entire mortgage industry.<\/p>\n","protected":false},"author":95,"featured_media":23526,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[33,7,69,1],"tags":[330,378,379,287,38,279],"financial_goals":[18,17,348],"class_list":["post-23350","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-first-home-buyer","category-sustainability","category-uncategorised","tag-b-corp","tag-b-corp-month","tag-climate-action","tag-ethical-finance","tag-pure-finance","tag-sustainability","financial_goals-buy_investment_property","financial_goals-buy_first_home","financial_goals-buy-my-next-home"],"acf":[],"yoast_head":"\nMortgage broking: An untapped resource for climate action?<\/h2>\n\n\n\n
But first, some numbers<\/h2>\n\n\n\n
Should mortgage brokers become the new climate activists? We think so.<\/h2>\n\n\n\n
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The whole point of the mortgage broking industry is to encourage competition in the loan market by giving borrowers easy access to a wider range of different loan products - rather than them only getting one option from whatever bank they happen to walk into. Think about it like this: a bank or lender with \u2018dirty\u2019 investments would never tell a prospective (or current) customer if there was a cheaper and \u2018cleaner\u2019 option for their mortgage at a different bank. But, a mortgage broker could! And honestly, considering those previous loan numbers, we think that they should.<\/a><\/p>\n\n\n\nThe scourge of greenwashing in the finance sector<\/h2>\n\n\n\n
Time for Plan B (Corp)?<\/h2>\n\n\n\n
Of course, B Corp certification is far from a perfect solution<\/a> and in recent years, the movement has had to contend with greenwashing concerns of its own<\/a>. However despite this, there are many B Corp businesses that do genuinely represent the certification\u2019s ethical intentions and who we are proud to stand alongside as peers within the collective. To our mind, the value of B Corp certification is that it presents the entire business community with a practical and tangible roadmap to better business, that any organisation can implement immediately. And right now, the words \u2018progress over perfection\u2019 have never felt so urgent.<\/p>\n\n\n\n
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\n\n\n\nIn the best interests of people, planet and back pockets (yes, it really is possible!)<\/h2>\n\n\n\n
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