Morals and mortgages

The aisles of my local supermarket are fast becoming a moral maze. Even as you read this I can safely predict that there
will be some guilty liberal standing in silent inner turmoil before the egg shelves, weighing up the justifiability of barn-laid
versus free-range.

And there will be couples wrestling with their consciences as to whether they should spend a few more pence to buy a
little more pecking space for some hapless chickens by buying organic or whether they should be putting their moral
investment into dolphin-friendly tuna.

But strangely enough, while eggs have become a key issue of conscience, they only play a small part in my weekly
budget. While I agonise over the few pounds I spend on them, I'm spending hundreds of pounds in other directions
without batting an ethical eyelid.

Mortgages will be the single biggest outlay for many people, but for all I know my monthly repayments could be
shovelled straight into loans for battery farmers or for re-equipping the bank's favourite repressive regime.

This wouldn't be the case if I had taken out an "ethical mortgage" - one of the latest areas of expansion of the concept of
ethical finance, where customers seek to put their money into investments which promise not to support
environmentally-unfriendly industries or businesses with dodgy human rights records. It's a kind of moral consumerism,
in which people use their spending power to promote their beliefs.

Among the ethical mortgage services available is a joint deal between a "sustainability consultancy", Thirdwave, and an
organisation of environmentally-aware independent financial advisers called the Ethical Investment Co-operative.

This offers the ethical equivalent of an each-way bet in which both lender and house being bought are subject to ethical
scrutiny, attempting to provide "clean money" from an approved lender and encourage the borrower to reduce any risk
of environmental damage from the home they're buying.

The scheme uses a panel of lenders, all fully mutual societies including the Skipton, Yorkshire and Scottish building
societies. Any of their mortgages are included in the scheme, or the Ethical Investment Co-operative can set up an
ethical investment fund as a repayment vehicle.

Once you've arranged this cleaner, greener loan, the ethical borrower will then give your proposed purchase an
environmental MOT. This will check out the "sustainability" of the house, looking at how it uses energy, water efficiency,
proximity to public transport and the kind of wildlife habitat offered by the back garden. The findings will be included in a
homebuyer's report which will advise how the property can be environmentally upgraded.

The survey costs the borrower nothing, there is no obligation to carry out any of the recommendations and you won't be
turned down if the property fails to impress. It is intended as an awareness-raising process to encourage more buyers to
think about the environmental impact of their homes.

"If it costs nothing extra, many people are happier knowing their money is doing something positive, such as reducing
pollution," said Thirdwave director Courtney Peyton. And she says this form of consumer pressure can be a "powerful
lever", forecasting that ethical mortgages will take 1% of the market in the next two years.

The Ecology Building Society takes a tougher line , preferring to support borrowers whom conventional lenders avoid
such as people "recycling" derelict properties.

E ven though the society is eschewing the mainstream, it lent more than ?1m last month. The society's current rates are
7.5% for residential borrowers with a 0.5% discount available for a year.

Other lenders are making a pitch on ethics. The Norwich and Peterborough Building Society offers a "green" mortgage
charging 7.8% with a 1.25% discount for four years. For the first five years the building society will plant eight trees to
balance out any emissions or pollutants generated by the house. The Co-operative Bank has a long-standing policy of
ethically screening its lending and investments.

It seems as though ethical finance is on the increase and we should welcome it. It can only be a matter of time before all
the banks climb on the bandwagon and start decking out their branches in wholemeal colours and printing bank
statements on rough brown paper.

For the clearest sign of what's ahead, I've had my first e-mail from an "ethical public relations agency". Ethical lunching, here we come.

coughlan_sean@hotmail.com