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We are a UK specialist bank. Our lending products include mortgages for landlords and loans for business customers.
We use our specialist expertise to help our customers achieve their ambitions.
Our strategy is to build a specialist bank for our customers, which delivers sustainable growth and shareholder returns through a low risk and robust model.
Strong financial and operational performance for the quarter, full year guidance reconfirmed.
Sustainability is central to our long-term success and it influences every aspect of our business
Sharing the progress we made in 2022 on key environmental, social and governance issues.
Keep up-to-date with the latest new releases and insights from across our business.
We examine the growth of the limited company landlord and the route to incorporation.
We understand how important our employees are to the business and, in recognition of this, we provide a variety of excellent reasons to work for us.
We offer a range of apprenticeship and internship positions to get people started on their career.
Climate change is one of the biggest challenges faced by the world today and we want to better understand the impact of our business on the climate and help our customers meet their environmental responsibilities.
At Paragon, sustainability influences every aspect of our business. We’re delighted to have received overwhelming support from the investment community on our plans to put sustainable lending at the heart of our strategy.
Richard Woodman Chief Financial Officer Director responsible for climate change matters
We are active members of various UK Finance initiatives on climate changes and during 2022 we joined Bankers for Net Zero (B4NZ), an initiative that brings together banks, businesses and regulators to accelerate the UK’s transition to net zero.
Paragon was the first UK bank to successfully issue a Tier 2 Green Bond, applying the £150 million proceeds towards loans to incentivise landlords to mitigate the impact of climate change.
Climate change related opportunities have been and continue to be considered as part of our strategy and we aim to support customers in their transition to a low carbon economy.
We have introduced buy-to-let mortgage products to support landlords investing to improve the energy efficiency of their properties.
Our team has developed a range of products which enable property developers to benefit from reduced fees when they commit to building greener homes.
Our motor finance loans have now been extended to include funding for customers who want to upgrade to a battery electric powered vehicle.
To plot a clear path to net zero, we need to understand the emissions we enable through our lending – these are known as our financed emissions. The largest contributor to our financed emissions is our buy-to-let mortgage portfolio where decarbonisation through household energy efficiency measures will play a vital role in the UK’s 2050 net zero ambition. We calculate our buy-to-let financed emissions using the Partnership for Carbon Accounting Financial methodology which estimates CO2 emissions using Energy Performance Certificate data.
We categorise the financial risks of climate change associated with lending into two categories - physical risks and transitional risks. Risks in each of these categories may impact over the short, medium or long term.
Climate change and other environmental factors which may, of themselves, increase financial risks. For example, increased flooding risk, which might have an adverse impact on security asset valuations.
Regulatory or government pressure on lenders, or other businesses, to reduce the environmental impacts of their product chains, impacting the ability to realise security on an asset or continue business lines.
We already consider many of these issues in our underwriting and credit risk processes and we’re working to further embed the consideration of both forms of risk across all lending.
In buy-to-let, our assessment of exposure to climate risk has focussed initially on the energy performance and flood risk of properties on our loan book.
The UK Government has announced initiatives to improve energy efficiency and it’s likely that policies based on EPC grades will be used to help the UK’s transition and reduce its property stock’s emissions.
The Government has committed to upgrade as many homes as possible in the Private Rented Sector and has proposed that new tenancies should have a minimum EPC of C by 2025, extending to all tenancies by 2028. Whilst we fully support the requirement to improve the energy performance of the UK’s housing stock, we believe policy needs to reflect the time and cost required for landlords to upgrade property, as well as the damage that could be caused to rental supply if implementation is rushed or poorly executed.
Only a small proportion of our properties are located in medium or high-risk zones for flooding from rivers or sea. Flood risk from other sources is considered in the underwriting process and work is ongoing to incorporate these additional risks into our risk metrics.
In SME lending, limited company customers have been broadly analysed by SIC codes to identify those operating in high carbon intensive industries. Results show 6.07% of companies are in this category.
Measures addressing other risk elements including those in other business streams, for example, classifications of business assets and motor vehicles financed by environmental impacts, and classification of development finance projects by environmental rating, are under development and continue to evolve.
To help us prepare for the future, our climate change strategy also includes:
The Taskforce on Climate-related Financial Disclosures (TCFD) framework sets out the main themes which companies should cover in their reporting on climate change and this became mandatory for Paragon from the financial year ending 30 September 2022.
Further information is included on pages 64 to 67 of the 2022 Annual Report and Accounts.
Paragon Banking Group PLC is a specialist finance provider. We offer a range of savings and lending products in the UK through Paragon Bank PLC.