Major European Banks Launch New Green Mortgage Scheme

The World Green Building Council (WorldGBC) Europe network and 37 major European banks have launched a new energy efficiency mortgage pilot scheme. It marks a major signal from investors that green building is a key growth market for Europe.

The pilot scheme is aimed at trialing new European criteria for energy efficiency mortgages, developed by Green Building Councils in WorldGBC’s Europe network and their partners under the EU funded Energy Efficient Mortgages Initiative. Some of Europe’s largest banks are participating in the pilot, including BNP Paribas, ING Bank, Nordea Bank and Société Générale.

Green home risk
Lower utility costs and their ability to hold their value better over time means green homes are increasingly recognised as less risky investments for both borrowers and lenders. Additionally, there is rapidly growing investor demand for green mortgage-backed bonds, helping make the business case for lenders to provide more attractive mortgages to those opting for greener homes.

The pilot scheme will see participating banks explore lower interest rates for mortgages meeting the scheme’s criteria, as well as other forms of preferential finance. The participation of nearly 40 major banks in the scheme is proof that big investors are increasingly recognising energy efficient homes as better investments.

Terri Wills, CEO at WorldGBC, said: “The commitment by Europe’s leading banks to this pilot shows green building is hitting the mainstream. WorldGBC’s Europe network has developed energy performance criteria for new builds and renovations to help set a consistent market standard for banks issuing green mortgage products. We look forward to developing the standards over time to support the investor community in addressing climate risks.”

The group of banks participating in the pilot will be investigating how the scheme’s criteria can be applied across their mortgage businesses over the coming one to two years. The initiative hopes to establish a new generation of mortgage products that help consumers drive energy use reductions across the property sector.

Stephanie Sfakianos, Head of Sustainable Capital Markets at BNP Paribas, said: “The launch of the Energy Efficient Mortgages Initiative will positively contribute to people’s lives and is one of the ways BNP Paribas is working with like-minded organisations to deliver quality solutions into consumers’ homes. BNP Paribas is committed to being at the forefront of delivering sustainable solutions and we believe the Energy Efficient Mortgages Initiative is a key building block in tackling the carbon emission challenge, while supporting consumers to live more comfortable and healthy lives.”

Michael Lewis, CEO at E.ON UK, said: “Green mortgages have the potential to unlock an energy efficiency revolution by enabling homeowners to access affordable finance through which to improve their homes. We are proud to be involved as a leading partner in the Energy Efficient Mortgages Initiative and believe that the pilot phase launched today offers a great opportunity for banks, utilities and energy efficiency experts to work together to turn a great vision into reality.”

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