By Stephen Richardson, Head of Projects | WorldGBC Europe
Do borrowers become more creditworthy if they take out a mortgage on an energy efficient (EE) building? Or, to start with a more prudent question: does there exist any empirical relationship between EE and the probability of mortgage default (PD) at all? The first question is concerned with the identification of a causal link between EE and PD, while the second questions the very existence of a link between the two. The current data environment is challenging for answering either of the two questions.
This month, the World Green Building Council (WorldGBC) Europe network and E.ON, both partners in the Energy Efficient Mortgages Initiative, have launched a new report ‘Creating an Energy Efficient Mortgage for Europe: the supporting role of the green building sector.’ The vision is to support the
growth of the market so that energy efficient mortgages will be made available to every borrower in Europe.
The report argues that to achieve this, the finance and the green building sector must work together more closely. It sets out a roadmap for building,
construction and energy efficiency organisations to follow that will help the market for green finance to flourish.
Commenting on the report’s release, Cristina Gamboa, CEO World Green Building Council said:
“Green finance is increasingly recognised as a powerful driver for climate action. The growth of the energy efficient mortgage market in Europe represents a unique opportunity to unlock new investment to accelerate the decarbonisation of the built environment. We are working with our members to ensure that our sector is equipped to seize this opportunity.”
The success energy efficient mortgage products can be secured through the support of businesses and organisations with expertise in building energy performance. They can take action to stimulate demand, streamline delivery of energy efficient buildings and renovations and provide extra support to the borrower.
These goals can be achieved through both greater collaboration across sectors and education and training to increase awareness and skills. Additionally, innovation is required to streamline the assessment, planning and delivery of high-performance buildings and renovations which satisfy lenders criteria for energy efficient mortgages. The actions recommended in the report are summarized in figure 1.
The report emphasises the importance of considering the needs of the borrower to ensure energy efficient mortgages have broad appeal. Marco Marijewycz, Senior Manager – Global Business Development, B2C Solutions at E.ON, and a co-author of the report explained:
“The successful growth of a European market for energy efficient mortgages can only happen if we put the customer front and centre. E.ON’s consumer insight work shows there’s appreciation across the board of the benefits energy efficient mortgages can offer for property owners; like lower energy bills, increased comfort levels and lower environmental impact. But for the market to reach mass scale, will require close cooperation between market actors such as banks and energy companies. E.ON is already pioneering such an approach and we believe the recommendations set out in this report provide clear guidance to facilitate wider cross sector collaborations.”
The WorldGBC Europe network is working with its member Green Building Councils (GBCs) to implement the reports’ recommendations. Several GBCs have already played an important part in convening national market hubs for energy efficient mortgages. And others have developed innovative tools and assessment approaches to help lenders evaluate the energy performance of their mortgage portfolios.
The Dutch Green Building Council (DGBC), has developed Woonmerk, a quality mark for homes that is intended to support energy efficient mortgages as well as other financing products. In scope, it covers multiple aspects of building sustainability performance for all types of homes and apartments, and assessment can take place either on a single home or a group of homes in a project.
The German Sustainable Building Council (DGNB) has launched a scheme whereby lenders’ criteria for green loans or energy efficient mortgages are evaluated against the criteria for DGNB sustainable building certifications. Where there is adequate alignment, the lender’s loan products can be labelled and marketed as having a “DGNB recognised sustainability rating”.
Finally, Irish GBC, Polish GBC and GBC Italia are part of a consortium which recently launched SMARTER Finance for Families. This EU-funded project aims to implement ambitious yet practical green homes and mortgage programmes in 12 European countries.
Copyright © Energy Efficient Mortgages Initiative
The EeMAP, EeDaPP, EeMMIP projects have received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No. 746205, No. 784979 and No. 894117 respectively.
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