On the occasion of the EU Green Week, the European Association of Co-operative Banks brought together today experts from its member banks from across the EU in a webinar to share experience on "Applying taxonomy to green mortgages in co-operative banks: challenges and opportunities".
Mortgage loans are one of the major business segments for cooperative banks. The new taxonomy, adopted in April, will significantly affect the business, by determining EU-wide criteria for sustainable investments in housing and other real estate. Beside challenges, the taxonomy creates new business opportunities.
Nina Schindler, CEO of EACB pointed out:
"We expect that the taxonomy criteria for mortgages will boost energy-efficient mortgages. The taxonomy will also allow members to issue other new products, green covered bonds. The members of the EACB expect a dynamic development regarding energy-efficient mortgages in the coming months. They are strongly committed to support this development as the renovation and the creation of energy-efficient buildings offers a huge potential for carbon-reduction."
It is evident that in the EU, buildings are responsible for 40% of the energy consumption and 36% of the total CO2 emissions. It is considered necessary beyond that to invest €100 billion per year until 2050 in the EU building stock in order to deliver on Europe’s commitments on climate change. While the EU has increased the amount of public funds available for Energy Efficiency, the European Commission suggests there is a need to boost private Energy Efficiency investment to deliver on the 2020 and 2030 energy targets and policy objectives. According to this, cooperative banks can really make the difference in the transition, supporting and favouring the renovation of the physical collateral which underlies our banks’ mortgage origination business. Through its lending policies, a cooperative bank could guide and stimulate the energy efficiency of the buildings it finances, improving the quality of the stock and increasing the sustainable culture of the customers. During the EACB webinar “Applying taxonomy to green mortgages for coop banks”, our experts had the possibility to exchange on how the green mortgage business could be affected according to taxonomy and on the opportunities it brings, like the possibility to issue green mortgage covered bond.