The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) and the Climate Bonds Initiative (Climate Bonds) are partnering to accelerate the issuance of covered bonds that adhere to the European Union Taxonomy for sustainable activities. To this end they have signed a Memorandum of Understanding to enhance transparency, disclosure and investment in energy-efficient finance.
Under this new collaboration, the EMF-ECBC and Climate Bonds will work together to develop and promote standards and frameworks that align covered bonds with the EU Taxonomy, which provides a clear and comprehensive classification system for environmentally sustainable economic activities. Covered bonds, which are debt securities backed by a pool of assets such as mortgages, play a crucial role in the financial system and aligning them with sustainability criteria will enable investors to establish genuine commitments to a low-carbon economy.
The key objectives of this partnership include:
- Developing Best Practices: Establishing guidelines and standards to ensure that covered bonds meet the stringent requirements of the EU Taxonomy, thus enhancing transparency and credibility in the market.
- Promoting Market Adoption: Supporting issuers in integrating sustainability criteria into their covered bond programmes, thereby increasing the size of the investible opportunity set.
- Raising Awareness: Educating stakeholders, including investors, financial institutions and policymakers, about the benefits and opportunities of covered bonds that align with EU sustainability goals.
Through this partnership, the EMF-ECBC’s Energy Efficient Mortgage Label (EEM Label) and the Climate Bonds Standard and Certification Scheme will work together to drive greater transparency in the green finance market. The EEM Label, a quality benchmark for energy-efficient mortgages, provides clear and reliable data on banks’ loan portfolios, supporting investor due diligence and improving consumer confidence in energy-efficient buildings and mortgages. By providing this transparency, the Label contributes to de-risking of banks’ portfolios, the growth of energy efficient investments and supports alignment with key regulatory frameworks, including the EU Taxonomy.
The Climate Bonds’ globally recognised Certification Scheme ensures that investments align with science-based criteria set by the Paris Climate Agreement, offering the financial market robust tools to evaluate climate risks and asset resilience. This joint effort will further facilitate access to green bond markets, improve the tracking of energy efficient mortgage performance, and foster greater investment in sustainable, climate-aligned assets.
The collaboration between the EMF-ECBC and Climate Bonds will reinforce the EEMI housing ecosystem and play a pivotal role in scaling up energy efficiency investment, making it more accessible and transparent for global investors and consumers alike.
Commenting on this, Climate Bonds CEO, Sean Kidney said:
