20 February 2017
On the 16th of February 2017, the EMF-ECBC hosted the Second Stakeholder Meeting of its Energy Efficient Mortgage Initiative at the Bibliothèque Solvay in Brussels where over 80 key stakeholders convened to discuss the Initiative’s progress to date and agree the next steps to be taken.
To recap, in September 2016, the European Mortgage Federation – European Covered Bond Council (EMF-ECBC) launched its ground-breaking mortgage financing initiative (see here) to support energy efficiency improvements in buildings, representing the first time a group of major banks and mortgage lenders, as well as businesses and organisations from the building and energy industries have come together to address the concept of energy efficient mortgages. The Initiative explores ways to mobilise private mortgage financing to boost energy efficient building renovation in Europe. The aim of the project is to create a suitable framework for a standardised Energy Efficient Mortgage product, which mortgage lenders in Europe can offer to borrowers seeking to purchase and retrofit an energy efficient property.
The Energy Efficient Mortgage Initiative responds to the European Commission’s Energy Union agenda, which places energy and resource efficiency at the heart of achieving the EU’s energy and climate goals. In the EU, buildings are responsible for 40% of total energy consumption and 36% of CO2 emissions. By improving the energy efficiency of buildings, the EU’s total energy consumption could be reduced by 5-6% and CO2 emissions by 5%. Furthermore, the Initiative has significance for the larger growth and jobs agenda in Europe, as more funding to boost energy renovation rates can lead to a significant increase in jobs in the building sector.
For banks and investors, a lower risk profile of green mortgages and a potential increase of value linked to more energy efficient properties can bring about tangible benefits, such as mitigation of risk and therefore a better capital treatment of banks’ green assets and protection against ‘brown discount’ of loan and investment portfolios. To this end, the Energy Efficient Mortgage Initiative seeks to develop a better understanding of how to differentiate between ‘green’ and ‘conventional’ funding, and how to capture energy efficiency within financial institutions’ lending practices.
In this context, the EMF-ECBC was delighted to open the event with a speech from Paul Hodson, Head of Unit, DG Energy, European Commission and to draw proceedings to a close with an address by Jyrki Katainen, European Commission Vice-President responsible for Jobs, Growth, Investment and Competitiveness.
The EMF-ECBC also took the opportunity of the event to formally present its preliminary analysis of its recent survey on banks’ existing green lending practices in Europe.
Speaking at the event, Luca Bertalot, Secretary General of the EMF-ECBC said:
“We recognise that we have an ambitious task ahead of us; our work on Energy Efficient Mortgages has now gained clear support from market participants and in particular from the European Commission. Indeed, stakeholder consensus and institutional coordination are essential pre-conditions to enable us to move forward. We believe this Initiative to be crucial to help bridge the gap in investment needed to improve the energy efficient renovation of buildings in Europe.
The feedback from our survey on banks’ ‘green’ lending practices reveals a strong interest in further developing the green market and underlines the importance of standardisation for energy efficient mortgages. We look forward to working together with our partners across the key sectors in developing solutions to meet these needs.”
More information about the Energy Efficient Mortgages Initiative, including the preliminary survey analysis report and the agenda of the Second Stakeholder Meeting, can be found here. The website of the EeMAP project is available here: energyefficientmortgages.eu.
Partners of the Energy Efficient Mortgages Initiative are the Ca’Foscari University of Venice, RICS, European Regional Network of Green Building Councils, E.ON, and SAFE Goethe University Frankfurt. The Second Stakeholder Meeting was supported by European DataWareHouse, a key stakeholder of the project.
The Third Stakeholder Meeting is scheduled to take place in Rome, Italy on the 9th of June 2017.
This article was originally published in the February 2017 edition of the EMF-ECBC Newsletter Market Insights & Updates.
The European Covered Bond Council (ECBC) is the platform that brings together covered bond market participants including covered bond issuers, analysts, investment bankers, rating agencies and a wide range of interested stakeholders.
