Draft guidelines for a planned European energy efficient mortgage have been published for a market consultation today (Monday), ahead of the launch in June of a pilot scheme, which will collect data that could substantiate a correlation between energy efficiency and lower risk.
The first legislation relating to an EU sustainable finance taxonomy will come as early as this spring, according to Commission vice president Valdis Dombrovskis, who said today (Friday) that a green bond label will be part of its action plan and a green supporting factor is still on the cards.
The EU High-Level Expert Group (HLEG) on sustainable finance delivered a “manifesto for far-reaching change” in the form of its final recommendations to the European Commission today (Wednesday), with a call for an official EU Green Bond Standard to be introduced this year.
A world-first green covered bond law has been proposed by Luxembourg’s ministry of finance, with the draft bill defining a new product to finance renewable energy infrastructure. The move is just the latest green finance initiative in the country – whose covered bond market has meanwhile been in decline.
Lower capital requirements for green assets could be credit negative for banks, according to Moody’s, because they could lead to “real risks” being underestimated, but the EMF-ECBC’s Luca Bertalot argues that the industry could satisfy an evidence-based European Commission approach.
The European Commission is “looking positively” at reducing capital charges to boost green loans such as energy efficient mortgages, Valdis Dombrovskis said today (Tuesday). A draft definition for such loans is due in February ahead of an EeMAP pilot phase that could support such a move.
The European Commission launched a public consultation yesterday (Monday) on how ESG factors could be integrated into the fiduciary duties of asset managers and institutional investors, as Valdis Dombrovskis spoke of the importance of private capital in achieving climate targets at COP23.
Engagement from fixed income investors with bond issuers remains relatively uncommon, according to the PRI, but a series of studies launched last week shows it can deliver benefits for both sides, with Pimco highlighting the particular relevance of ESG analyses when investing in banks.
A market initiative to produce a standardised pan-European protocol and portal for financial data on energy efficient mortgages, EeDaPP, has won support and funding from the European Commission, ahead of the forthcoming pilot phase of the Energy efficient Mortgages Action Plan (EeMAP).
Buyers of green bonds are potentially receiving climate-related credit protection for free, Bank of England governor Mark Carney highlighted at the World Bank/IMF Annual Meetings yesterday (Saturday), but he said prudential regulation should not be used as a “backdoor” for climate policy.