EEMI brings banks one step closer to achieving EU Taxonomy alignment with new methodology to identify ‘15% best in class’

Brussels, 18 January 2023 – For immediate release

The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) welcomes the publication of a study  prepared by the Comitato Termotecnico Italiano (CTI) and CRIF under the Energy Efficient Mortgages Initiative (EEMI) of the percentage distribution of primary energy values in the Italian national building stock according to the EU Taxonomy requirements.

The Study analyses the Italian building stock and the availability of Energy Performance Certificates (EPC) and identifies a threshold for different building types and climate zones at 15% of the distribution to comply with the 15% best in class requirement of the EU Taxonomy. At the same time, the CTI has also designed a methodology for identifying newly buildings with a performance 10% better than nearly zero energy (nZEB) buildings.

In the spirit of the EEMI, this Report and its underlying methodology has the potential to be shared and adapted across other jurisdictions and EEM national market hubs with a view to supporting the identification of appropriate thresholds in these jurisdictions as necessary and supporting banks in achieving EU Taxonomy compliance.

Indeed, a methodology of this kind will support banks in evaluating the energy efficiency of their current loan portfolios, as well as in originating new energy efficiency loans and “greening” their balance sheets.

Commenting on this development, EMF-ECBC Secretary General Luca Bertalot stated:

“In the context of ongoing efforts to developing a sustainable EEMI home ecosystem, this Study represents an extremely valuable market tool, which will provide transparency for consumers, lenders and investors and greatly reduce the risk of green washing. This development highlights the commitment of the banking sector to progressively greening their loan books and opens up opportunities to boost Taxonomy-aligned bond issuance. In this respect, we believe that the EEM Label through the Harmonised Disclosure Template (HDT) can act as a compass for investors with its focus on market transparency and promotion of best practices. The CTI Study will encourage other financial institutions in the EU and beyond to adopt the underlying methodology with a view for banks to achieve EU Taxonomy compliance.”

Commenting on this development, EEMI Italian Hub Coordinator Daniela Antonini (Banco BPM) said:

“I’m very proud to be among the promoters of this initiative. I am strongly convinced that this study done jointly by CRIF and CTI will allow Italian banks to implement transparency in sustainability, in all its forms, and also hope that it will help institutions to increasingly achieve alignment of their activities with the Taxonomy regulation. Setting clear principles today is fundamental for banks in order to help clients to progressively reduce the environmental impact of the housing sector.“

Contact:

Luca Bertalot

EEMI Coordinator

Tel: +32 2 285 40 35

lbertalot@hypo.org

Notes to the Editor:

• Established in 1967, the European Mortgage Federation (EMF) is the voice of the European mortgage industry, representing the interests of mortgage lenders and covered bond issuers at European level. The EMF provides data and information on European mortgage markets, which were worth around 8.3 trillion EUR at the end of 2021 (EU27 + UK). As of January 2023, the EMF has 14 members across 12 EU Member States as well as a number of observer members.

• In 2004 the EMF founded the European Covered Bond Council (ECBC), a platform bringing together covered bond issuers, analysts, investment bankers, rating agencies and a wide range of interested stakeholders. As of January 2023, the ECBC has over 120 members across more than 30 active covered bond jurisdictions and many different market segments. ECBC members represent over 95% of covered bonds outstanding, which were worth over EUR 2.9 trillion at the end of 2021.

• The Energy Efficient Mortgage (EEM) Label was established in 2020 by the European Mortgage Federation – European Covered Bond Council (EMF-ECBC) as a clear and transparent quality label for consumers, lenders and investors, aimed at identifying energy efficient mortgages (EEM) in lending institutions’ portfolios, which are intended to finance the purchase/construction and/or renovation of both residential (single family & multi-family) and commercial buildings, with a focus on building energy performance. The first labels were issued in 2021 and as of January 2023,  25  lending institutions from 12 countries hold the Label covering 29 financial products.

• The development of the EEM Label was triggered by the EMF-ECBC’s work, in its role as Coordinator, on the Energy Efficient Mortgage Initiative (EEMI). As such, the EEM Label is an Industry-led initiative designed to support the market with a three-fold target:

• To achieve a gradual implementation of the EU Taxonomy in the mortgage sector (1/3 of bank portfolios), facilitate a fundamental shift of bank strategies, triggering a green wave in the mortgage market which counts for around 45% of EU GDP, and allow the market to contribute to the EU Green Deal and Renovation Wave Strategy

• To provide investors and consumers with a robust European benchmark and set of best practices which will boost market confidence and secure social inclusion.

• As endorsed by the European Banking Authority, to stimulate the collection of mortgage-specific data via the EEML Harmonised Disclosure Template (HDT) focusing on key energy efficiency and ESG parameters of the underlying asset, providing a quantitative database which demonstrates the “greenness” of labelled products.

For the latest updates from the EMF-ECBC, follow us on Twitter, LinkedIn and YouTube or visit the EMF-ECBC website.