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Environment

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Overview

Our environmental impacts can be considered under two categories, our operational impacts and the impact of our lending products.

Until recent periods, the focus of our environmental policies have been our own activities, which are described below.

However, the use to which customers put the funds they are advanced, also has an impact. This gives rise to two related issues:

  • climate change and other environmental factors may increase financial risk
  • regulatory and governmental pressure might be brought to bear on lenders, amongst other businesses, to reduce the environmental impacts of product chains

We already consider these types of issue in our underwriting and credit risk processes to some extent.

In April 2019, the Prudential Regulation Authority (PRA) published a Policy Statement noting that climate change, and society’s response to it, present financial risks which are relevant to its objectives. The Statement sets out the regulator’s expectations of the type of strategic approach it expects firms to adopt in managing these financial risks.

In response to the PRA’s intervention and more widespread societal concerns, we are developing an enhanced approach to identifying the potential impacts of climate change on our business and developing a system to manage the financial risks involved.

Operational impact

Paragon is mainly engaged in mortgage, consumer and commercial finance. As a result, its overall environmental impact is considered to be low.

Specialist Fleet Services (SFS), part of our Commercial Lending division, leases refuse collection vehicles to local authorities throughout the UK. SFS undertake additional aftersales activities that include servicing, maintenance and breakdown support and has the most significant potential environmental impacts.

The main environmental impacts of our other operations are limited to universal environmental issues such as resource use, procurement in offices and business travel.

Policy and Green Charter

We comply with all applicable laws and regulations relating to the environment. Our environmental commitments are expressed in our Green Charter which is approved by the Chief Executive and kept under regular review.

The Green Charter aims to:

  • ensure all buildings occupied by Paragon are managed efficiently
  • encourage employees to conserve energy
  • promote recycling by negotiating contracts and providing facilities to enable employees to recycle office waste and other used products
  • control business travel by promoting video conferencing between sites when appropriate and provide opportunities for employees to travel to work in various ways; such as providing cycle racks
  • ensure liaison with the local community through our Responsible Business initiatives
  • ensure that redundant equipment is disposed of in accordance with the Waste Electrical and Electronic Equipment Regulations
  • ensure that all fluorescent light tubes are disposed of in a safe manner, compliant with appropriate regulation
  • arrange for paper waste products to be recycled securely by third parties

Groupwide recycling and awareness campaigns are also run to reduce various forms of waste such as food, consumables or energy.

Environmental risk management

Our environmental commitment is set out in the Health, Safety and Environmental policy that is approved by the Chief Executive and the People Director and which is publicly displayed in our buildings.

Energy data is collated by Group Property, the function responsible for managing the Group’s premises. Consumption figures for all locations occupied, whether directly owned or tenanted, are actively monitored. This is reported upwards to Board level.

SFS operates from several workshops around the UK and has exposure to several waste streams (oils, vehicle parts etc) that come from their own workshop activities. These are effectively managed under an environmental management system that is certificated to an International Standard – ISO14001:2015. SFS has a dedicated Health and Safety Manager with direct responsibility for environmental issues at all SFS sites.

The environmental risk inherent in Paragon’s operations is managed by the Group Property function and is within the remit of the Chief Operating Officer. It is monitored within the Group’s operational risk management framework and is monitored by the second line Operational Risk function and the Operational Risk Committee.

Paragon complies with the Energy Savings and Opportunities Scheme (ESOS). This is a UK Government initiative, under an EU Directive. It requires Paragon to identify and reduce its energy consumption. We collected data for the Environment Agency compliance submission under ESOS in December 2019.

Supply chain and procurement

Our principal suppliers comprise the outsourced savings administrator, legal and professional services providers, building lessors and IT service providers. They are exposed to similar operational environmental risks to Paragon.

We remain committed to identifying, targeting and addressing inefficiencies within our supply chain. The procurement function is currently working with key suppliers to identify solutions to continue to reduce the environmental impacts of our business activities whether direct or indirectly.

All our pre-printed stationery items are from renewable sources certified by FSC and over 80% of the electricity purchased in the year ended 30 September 2019 was obtained from sources certified as renewable by the Office of Gas and Electricity Markets.

Environmental performance

Paragon’s environmental key performance indicators have been determined having regard to the Reporting Guidelines published by the Department of Business, Energy and Industrial Strategy (BEIS) and the Department for Environment, Food and Rural Affairs (DEFRA) in March 2019.

To find out more about our environmental performance, read our 2019 Annual Report

Due to the nature of our business activities, we don’t consider that we have a significant environmental impact under the headings ‘Resource Efficiency and Materials’, ‘Emissions to Land, Air and Water’ or ‘Biodiversity and Ecosystem Services’ set out in the Guidelines.

See page 60 and 61 of the 2019 Annual Report and Account for detailed performance information.

Paragon Banking Group PLC.  Registered in England number 2336032.  Registered office 51 Homer Road, Solihull, West Midlands  B91 3QJ.