Unlocking the Potential of Mortgage Financing to Support Implementation of COP21 Climate and Energy Targets
Brussels, 8th of November 2016
The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) is pleased to present its ground-breaking Energy Efficient Mortgages Initiative at the upcoming UNEP FI-IPEEC Side Event on “Scaling-up financing for energy efficiency”, which will take place during the global COP22 climate summit on the 15th of November 2016.
Luca Bertalot, Secretary General of the EMF-ECBC, will be present in Marrakech to explain how the new pan-European mortgage financing initiative, launched by the EMF-ECBC and its partners in September 2016, will boost energy efficiency improvements in properties and contribute towards the creation of a financial system that supports sustainable investments.
The Paris Agreement highlights the need to finance climate mitigation and adaptation globally by USD 100 billion per year by 2020. To support this goal, there is a clear need to attract private financing, which is independent from but complimentary to public funding.
The ultimate objective of the Energy Efficient Mortgages initiative is to design a new bank financing mechanism, based on a standardised approach across Europe, to encourage households’ energy efficient improvements to the EU’s housing stock by way of financial incentives linked to the mortgage. For banks and investors, the tangible benefits lie in borrowers’ reduced probability of default and in the increase in value of the more energy efficient property, leading to a more favourable capital treatment of energy efficient loans on banks’ balance sheets. Furthermore, from a risk management point of view, the initiative allows for better protection against a “brown discount” in banks’ and investors’ portfolios.
To address the concept of energy efficient mortgages, and facilitate climate change mitigation from a financial standpoint, the EMF-ECBC has established close partnerships with major banks and mortgage lenders, the valuation sector as well as with businesses and organisations from the building and energy industries.
“The banking sector can make a unique contribution to support the achievement of the COP 21 targets, especially considering that buildings are responsible for 40 % of energy consumption and 36% of CO2 emissions in the EU. Given that the value of the European mortgage market is equal to 53% of the EU’s GDP, there is huge potential for it to help unlock the benefits of mortgage financing to support energy efficiency and help implement the climate targets set by the EU and the wider international community.”
Luca Bertalot, Secretary General, EMF-ECBC
Tel: +32 2 285 40 35
Notes to the Editor:
1. 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 over 7.0 trillion EUR at the end of 2015. As of November 2016, the EMF has 19 members across 14 EU Member States as well as a number of observer members.
2. 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 November 2016, the ECBC has over 100 members across 26 active covered bond jurisdictions and many different market segments. ECBC members represent over 95% of covered bonds outstanding, which were worth nearly 2.5 trillion EUR at the end of 2015.
3. In June 2014, the EMF and the ECBC came together to form the Covered Bond & Mortgage Council (CBMC), which replaced the European Mortgage Federation as the legal name under which both entities operate, although in practice, both the EMF and ECBC brands are maintained and used to identify the two areas of focus within the CBMC’s scope.
4. The Covered Bond Label Foundation (CBLF) was established in 2012 by the EMF-ECBC. The Covered Bond Label website became fully operational on the 1st of January 2013, with the first Labels being effective since then. As of October 2016, the website features the Harmonised Transparency Template (HTT) and 14 National Transparency Templates, published by 80 issuers disclosing information on 96 labelled cover pools across 15 jurisdictions. The Covered Bond Label website currently provides issuance data on close to 4,300 covered bonds, amounting to a total face value of over 1.4 trillion EUR, out of which over 2,000 covered bonds already include information on the Liquidity Coverage Requirement (LCR).