Paul Ellis

Ecology chief executive Paul Ellis

People before pounds

Ecology chief executive Paul Ellis has been in his role for longer than any other building society boss. He tells Mike Hughes how he’s managed to stay at the top for 22 years as so much around him has changed.

Paul Ellis laments the demise of some of the Ecology Building Society’s competitors. As he was making a name for himself a quarter of a century ago, there was a round of demutualisation as new regulations meant that building societies could offer the same services as retail banks. Led by the Abbey National, some merged with existing banks or became independent banks in their own right.

Clear ground for the mutuals perhaps, but Ellis hasn’t lasted so long at the top in an atmosphere of ethics, sustainability and people-before-pounds without having that sort of DNA himself. He would rather take on the whole market to earn his slice of it than take the place of those who have fallen by the wayside. He’s one of the good guys.

“The sector contracted and we lost some famous names, which was unfortunate,” he says in a voice that I can’t imagine ever being raised – I’m not saying it doesn’t happen, just that it is difficult to picture.

“And we lost them permanently, in that they are no longer around as independent entities after what, in many respects, was a very short-sighted move and didn’t serve the sector well, with short-term gains and instability. But now we see quite a resurgence with societies punching above their weight in terms of the sector’s volume.”

There was certainly a long and bumpy journey to that healthy atmosphere, but the Ecology – which only has 28 staff – stood by its principles of building a greener society by providing mortgages for projects that respected the environment and supported sustainable communities.

“When we started in 1981, there were around 250 societies; by the time we got to the early Nineties there were 80 or 90 and now we are down to 44,” explains Ellis. “A lot of that was down to consolidation, but then the financial crisis broke and we found that there was a flight to safety and we know from other organisations that lend as we do with a focus on sustainability that they benefited because people wanted to know more about how their money was going to be used, with customers telling us they had been meaning to do something with their savings and investments for a while, but the crisis provided the jolt they needed.

Ecology BS“Remember, we were the last building society to be set up and some of our peers told us we wouldn’t last past Christmas, but we have had uninterrupted growth for the past 30 years. Is there a limited market for what we do? We don’t know yet.”

In a way, you can understand the confidence of those peers. Here was the new kid on the block deliberately restricting its customer base rather than throwing open the doors to anyone with money to invest. Surely not enough people would be sufficiently interested to actually hand over their wallets?

But they had misread the strength of the mood in their own market. This was a time for principles and trust.

“We managed to stay very focussed on what we were doing and had confidence in our capabilities and in being able to define what we were about,” says Ellis. “There was a paradox that we had limited our business and had continued to grow and the focus we had meant we kept away from certain types of business.

“We didn’t head down the self-certification route or start buying mortgage books just to boost our balance sheet because buying and selling customers just didn’t sit with our model. So, when the liquidity crisis hit we were well out of it, which – for me – really proved in 2007 and 2008 the viability of our concept.

“Now we are much more accepted and the general lie of the land is pointing in our direction as millennials respond to the ideas of ethics and values.”

The fact that ethics and a role in protecting the planet are still not at the top of every lender’s list of priorities remains a bit of a mystery to him, but things are changing and a sense of urgency around the issue – rather than just a preference – is supporting the Ecology model and can only be good for all types of businesses.

“The Bank of England is really taking climate change seriously as a risk to the financial system, so it is time for all organisations to look at how these issues across their sectors will affect our futures and how they will respond with products and services. Some will take to it more readily than others, but a lot of these things are about seizing an opportunity in areas like renewable energy, which is being taken up by some countries quite enthusiastically and in some respects the UK is one of those that are a bit more laggardly, certainly at government level.

“There is a sense of dismay that in our view we are missing out on another opportunity to build our economy in the right direction. We are not here just to manage our balance sheet, but to change minds and move our infrastructure to be more sustainable and forward-looking.

“That is a big thing to claim as a small organisation, but we have shown that you can stick to your mission, think differently and still prosper and I think social responsibility will play a bigger part in the future, as these ideas are brought more into the mainstream.”

EllisIf all his hard work is to make a real difference, Ecology’s green requirements for the people it will support need to be more than just a handy label Yorkshire entrepreneurs can quickly adopt to help secure funding. They are a core way of thinking what a new business is all about, and Ellis and his team are eager to find more small businesses with a long-term commitment that might shift the balance one workshop or kitchen table at a time.

“We are proud of the lending we do that supports ecological building projects, but it extends well beyond that, to helping businesses and projects that promote sustainable communities and lifestyles,” he says. “We’re proud to support a wide range of organisations that help to build a greener society – such as organic and vegetarian restaurants, small businesses involved in reclamation, repair or sustainable technologies as well as office and workshop space for green businesses.

“That also includes lending that strengthens local economies and communities by maintaining services through community-owned assets such as shops, pubs and post offices, and we also lend where land will be managed for low-impact including organic farming or smallholdings or by providing educational and leisure facilities that help promote the value of the natural environment.”

The idea of that kitchen-table business helping save the planet is a tricky one to grasp, but as one of thousands each year, the aim becomes a little more tangible. According to last year’s annual review, its strategy enabled Ecology to lend £30.7m for mortgages, hold savings of £163.1m, and make just short of £1m in profit.

“I have an affinity with the ideals of the society and, in some respects, it is more of a passion than a job where I just turn up and see what I can get out of it,” Ellis says. “I see interesting ideas being thrown up by interesting people all the time, and the challenge is for us to respond and see how we can support them, which means that we are learning all the time and when you see something moving forward you can keep that passion and make sure there is always an environment and social benefit to what we do with our money.”

He takes his work home with him every night, having just completed a major energy project at his own home – a Sixties modernist property in north Leeds in need of an update and providing the perfect model of what can be achieved, with insulation and triple glazing making a huge difference.

“It has worked out really well and we are now just adding things like the right paint to protect the cladding and I am toying with some renewables on the roof…”

His passion for work and home is equal, because they both need the best environment to thrive and he is in a position to influence that on an enviable scale, whether it is as a chief executive making sure our money makes a difference, or as a Yorkshireman, establishing a five-acre woodland in Calderdale and becoming one of the Friends of Gledhow Valley Woods near his home, where he lists his duties as “Treasurer, otherwise mostly the drainage in the bottom field…”

In mud and boots or shirt and tie, he’s looking after us all.