The kids are all right: parents and children are greening borrowing behaviours

• Half (48%) of parents will stop to consider a lender’s impact on the environment when applying for a loan, with only one in 10 (12%) highly unlikely to do so
• Over a third (36%) of borrowers will scrutinise a lender’s green credentials, rising to three in five (58%) among young borrowers aged 16 to 24 years old
• Three in five people now say a lender’s track record on the environment is important, rivalling price, quality of service, and regulatory adherence when choosing between lenders

Consumers are placing a significant emphasis on the sustainability credentials of UK lenders when choosing where to take out a loan, with parents and younger generations most likely to look for evidence of positive action on the environment when applying. That is according to research from leading UK financial services provider Novuna, which sought the opinions of over 2,000 consumers for the study into green borrowing behaviours*.

A third (36%) of all UK adults will now weigh up the green credentials of a financial services provider before taking out an unsecured loan, such as a personal loan or credit card. And it is parents with children under 17 years old who are driving this shift, with 48% showing their concern for future generations by taking environmental factors into account.

This trend is also being felt among the younger generation, who are far more likely to vote with their wallet, eschewing brands they deem not to be operating sustainability or ethically. Three in five (58%) 16–24-year-olds report that they will look at a lender’s track record on green issues before applying for a loan, and half (49%) of 25-34 year olds share this sentiment. Unsurprisingly, it is the older age groups who are less likely to be swayed, with 30% of 45–55-year-olds saying they would take this particular track record into consideration, and just a fifth (22%) of 55–75-year-olds.

The research also shone a light on both the benefits that borrowers believe their decision-making is having on the planet, and a general sense of approval of their lender’s green policies. Two in five (42%) believe that their choice of financial services provider has a positive impact on the environment, with just 5% believing it results in a negative impact, implying a positive consensus among borrowers of the industry’s green credentials. Again, it is those with children for whom this sentiment is more front of mind, with half (53%) of parents believing they are making a positive impact.

Borrowers have historically based their decision-making on price, the quality of customer service, and regulatory oversight, but the research demonstrated how a lender’s track record on the environment is now a similarly major concern. When asked about their main priorities when choosing to take out an unsecured loan from a financial provider, over a quarter (26%) of UK adults said environmental standing as a very important factor, with 60% considering it an important factor. Conversely, just 10% said it carries no importance.

Of particular interest will be the changing priorities of the older generations, which tend to be those in the highest income categories and with the biggest spending power.

Theresa Lindsay, Group Marketing Director at Novuna, said: “Consumers are becoming increasingly aware of the impact their spending habits have on the environment, which is extending beyond physical goods and into their choice of finance provider, which is a really positive move. Despite the younger generations setting the benchmark for these green finance habits, the research demonstrated the challenge when it comes to harnessing the power of the grey pound and convincing   these consumers that their financial choices really can drive environmental change.

“Whilst there is bound to be a shift in focus in the current climate with the cost-of-living pressures, it’s vital that the finance industry doesn’t lose sight of the growing trend among consumers to vote with their wallet to deliver positive change.”

-ENDS-

Notes to Editors

*The survey was conducted by Ipsos Mori on behalf of Novuna (at the time branded as Hitachi Capital) in December 2021. A total of 2,100 British adults between the ages of 16-75 were surveyed. Respondents were asked a series a questions about their attitudes towards the importance of a financial services provider’s environmental credentials.