The Business Case for Integrated Retrofit: How banks, insurers, and the government can support healthy, efficient, and resilient homes

18 June 2025 – A joint research between Banking Environment Initiative and ClimateWise examines the socioeconomic and resilience benefits of building retrofit, and proposes business case for banks, insurance companies, and the government.

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The UK’s housing stock accounts for 12 per cent of the nation’s greenhouse gas emissions, and 84 per cent of households still use gas or oil for heating and hot water. Poor energy efficiency and a lack of climate resilience consideration expose households to rising energy bills, health risks and mounting climate threats, ultimately driving up public costs and reducing economic productivity. Most homes that will exist in 2050 have been built already, underscoring the urgency of a national retrofit programme that delivers energy efficiency, low carbon heating and climate adaptation. 

Banks are exposed to rising climate and transition risk across their £1.16 trillion mortgage portfolios, as well as their lending to registered providers of social housing, which accounts for approximately 16.3 per cent of England’s housing stock. Properties with poor energy performance and lower resilience are more exposed to default and devalue in a changing climate. Banks need to embed retrofit into lending processes by developing risk-adjusted pricing that rewards improvement, integrating retrofit finance into home purchases, therefore supporting borrowers to achieve more efficient and resilient homes. By capitalising on the socioeconomic and resilience benefits of retrofit, banks can reduce arrears, stabilise collateral values and open new sustainable finance markets. 

Insurers face increasing claims from climate-related damages, with risks to long-term insurability. By ensuring that adaptation measures are recognised and valued as part of underwriting models, developing resilience-focused insurance products, and embedding retrofit into claims handling, insurers can reduce losses and support customer adaptation. As major clients of the repair and construction industry, insurers can also advocate raising standards and expand market capability through investment in skills and service networks. 

Energy-efficiency and resilience improvements today reduce fuel poverty, prevent future financial distress and lessen the burden on public systems – all of which have direct implications for the financial sector and the broader economy. Therefore, it is important to reframe retrofit as not only a tool for climate mitigation but also a strategic investment in long-term financial stability, people’s well-being, and economic resilience. Banks and insurers, alongside the government, need to recognise the materiality of retrofit: how it influences mortgage stability, insurance claims, property values and future growth. 

To unlock this potential, retrofit needs to be reframed as an integrated investment, one that combines climate mitigation, adaptation, improved public health, well-being and productivity, and financial resilience. There needs to be a shared vision for housing stock that is climate resilient, low carbon and financially secure. This transformation requires a co-ordinated effort across government and the financial sector, underpinned by shared data, common standards and aligned incentives. 

The government needs to lead with a joined-up, comprehensive and long-term national strategy, recognising retrofit as a lever for economic growth, financial stability, energy security, reduced inequality, and lower health and welfare spending. Strategic action includes reforming the Energy Performance Certificate (EPC) regime, harmonising building regulations and standards, decoupling electricity and gas prices, and crowding in private investment through guarantees and blended finance. A strategic policy lever needs to be identified for a co-ordinated strategy to be delivered. Public education campaigns and support for local authorities will be critical to stimulating demand, scaling up delivery capacity, and ensuring a just transition that benefits all communities. 

To capture the full socioeconomic and resilience dividend, banks, insurers and the government need to collaborate to build a shared industry-wide knowledge base. Retrofit is no longer a niche agenda: it is central to ensuring that homes remain safe, insurable and affordable in a warming world. By working together, the government, banks and insurers can lead a national transformation that delivers for households, the economy and the planet.

Citing this report 

University of Cambridge Institute for Sustainability Leadership (CISL). (2025). The Business Case for Integrated Retrofit: How banks, insurers, and the government can support healthy, efficient, and resilient homes. Cambridge, UK: Cambridge Institute for Sustainability Leadership. 

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