Leeds Building Society turns climate risk into opportunity with Hometrack and Twinn

Leeds Building Society is the fifth largest building society in the UK, with assets of over £30 billion. It provides mortgages through a network of approved brokers and directly to members, across mainstream residential, buy to let and other segments such as shared ownership and interest only.

Since 2021, Leeds Building Society has worked with Hometrack Data Systems, which provides valuation and risk products to the residential property market. Hometrack partners with Twinn by Haskoning, the global leader in physical climate risk analytics for financial services, to deliver comprehensive physical risk data. This provides lenders with a one-stop solution to meet both current needs and future regulatory requirements under SS4/25, including insights into flood, subsidence, coastal erosion, wind, wildfire, heat, drought and more.

This three-way collaboration between Leeds, Hometrack and Twinn has led to a pioneering approach to responsible lending and climate risk management.

The challenge: Response to regulation with a robust approach rooted in reliable data

A fast adopter of climate risk solutions

Like many in the financial services industry, Leeds Building Society’s focus on climate risk was amplified as the Bank of England pushed for banks and insurers to take a more structured approach to climate risk management.

“Our strategy has always been to act quickly in response to regulation, but with a robust approach rooted in reliable data,” explained Graeme McRitchie, Head of Prudential and Enterprise Risk at Leeds Building Society. “The reliability element was key. We didn’t want to blindly attribute climate risk scores to tick a compliance box. We wanted data we could interrogate and understand, so we could translate this complex area into high-quality risk management processes.”

But how to achieve that combination of speed and reliability?

Leeds first tried to develop its own solution using open-source data, but that proved challenging. “Open source data on its own was too high level for our purposes,” said Neil Lewis, Head of Credit Decisioning at Leeds Building Society. “For example, we struggled with precise address matching and with understanding the impact of future climate scenarios. As a result, it was hard to integrate the data into decision making, automation and meaningful reporting. We therefore started to look at what the market had to offer.”

The solution: Quantifying climate risk exposure at origination and portfolio level 

Leeds’ initial experiences demonstrated the importance of ease, in addition to speed and reliability. Their vision was for climate risk data to be ingested live and used at origination, as well as in back book analyses and stress testing.

That’s what Hometrack brought to the table through its collaboration with Twinn. Twinn climate risk data integrates with Hometrack’s mortgage automation and property valuation solutions, providing a one-stop solution to lenders.

Rob Carling, Twinn Channel Sales Manager, explained: “By leveraging Twinn's advanced climate analytics through Hometrack's platform, Leeds Building Society can now access both aggregated portfolio-level insights and granular property-level risk ratings across multiple Representative Concentration Pathways (RCPs) and emissions scenarios. This capability enables the Society not only to quantify and monitor climate risk with precision but also to model how those risks will evolve, transforming complex climate data into actionable intelligence for strategic decision-making.”

Automated decisioning process for new mortgage applications

Through the partnership with Hometrack and Twinn, climate risk is automatically incorporated into Leeds’ automated decisioning process for new mortgage applications. “The data comes ready to use at the point we need it – we don’t have to amend, update or cleanse it. It’s a seamless process that enables real-time decision making. At the same time, we have the flexibility to get granular down to property level and assess complex individual lending decisions,” said Neil.

For stress testing and reporting, a key benefit is the way the solution simplifies complexity, aligned with the Bank of England’s regulatory approach, in a way stakeholders can easily understand. Graeme explained: “We get a full back book report, where we can go from an overall risk score down to individual components. We also have a summary report with benchmarks and insights into how our risk profile is evolving. Together, these help us incorporate climate risks into internal policies and our broader strategy.”

Supporting brokers and consumers

A significant proportion of the building society’s mortgage lending is broker-based, and part of its climate risk management approach has involved broker engagement to help them – and by extension customers and members – better understand the impact of climate risk on properties.

“We don’t want to create ‘climate prisoners’. Because we can interrogate climate risks at an individual property level, we can help customers understand more about the property they’re considering. We’re also exploring broader industry opportunities for future new build and retrofit programmes, with stakeholders sharing data so as to make homes more resilient,” said Neil.

The impact: From risk to opportunity

With fast access to reliable, easy-to-use climate risk data, Leeds Building Society is in a strong position to navigate future regulatory and environmental changes.

The Bank of England’s Supervisory Statement 4/25 (Enhancing banks’ and insurers’ approaches to managing climate-related risks) reinforces the need for climate risk management to be fully integrated across governance, risk management, and strategic decision-making. With Twinn’s expertise and platform, organisations like Leeds Building Society can achieve best-in-class integration of climate risk management, ensuring they are fully prepared to meet evolving regulatory expectations.