Thirty-seven banks with a 45% share of European mortgage lending are participating in the pilot scheme of the Energy Efficient Mortgages Initiative, which was launched yesterday (Thursday), under which they will test implementation of a new framework with a view to creating a final product.
The Energy Efficient Mortgages Initiative is aimed at delivering a standardised European framework and data collection process for energy efficient mortgages, with favourable financing conditions for energy efficient buildings and energy saving renovations. The Energy Efficient Mortgages Action Plan (EeMAP) is seen as potentially creating a large pool of assets that could naturally be used as the basis for green covered bonds, while the intertwined Energy Efficiency Data Portal & Protocol Initiative (EeDaPP) could provide evidence to support lower capital charges for energy efficient mortgages. (The overall Energy Efficient Mortgages Initiative comprises EeMAP and EeDaPP.)
By joining the pilot phase, the 37 banks – supported by 23 other organisations – have committed to test the implementation into existing product lines and processes of an energy efficient mortgages framework developed for the initiative, prior to an anticipated roll-out of an energy efficient mortgage product in the future. The pilot scheme is expected to last at least two years.
“This initiative is intended as a clear response to the call for concrete market action to support the Capital Markets Union, growth, financial stability and energy efficiency agendas,” said Luca Bertalot, EMF-ECBC secretary general, who is coordinator of the Energy Efficient Mortgages Initiative. “The significant critical mass that these pioneers constitute underlines the willingness of the market to take action and to play a pivotal, potentially game-changing role, in supporting the European Commission Action Plan on Sustainable Finance, by designing common, multi-stakeholder market best practices.
“After many months of preparation and extensive consultation of relevant actors, the pilot scheme will provide real business responses to the challenges of designing a market framework for energy efficiency financing and supporting the EU’s transition to a more sustainable future. Much effort has been dedicated to this initiative by and across a number of sectors, and we are therefore excited that the major European lenders from a wide range of jurisdictions have recognised the importance of the initiative and have committed to road-testing it.”
Bertalot said at a launch event in Windsor yesterday (pictured) that many other banks are considering joining in, potentially taking the share of European mortgages of participating banks above 50%, or above 65% when only Eurozone mortgage lending is considered.
Working groups are being established to focus on various aspects of the initiative, with a view to reporting back any key problems at a follow-up meeting in September, where banks can then work with the EeMAP advisory committee – comprising European and international institutions – on solutions.
A list of participating organisations can be found on the EeMAP website here.
We will bring you more insights from the EeMAP launch event next week.
Photo credit: EeMAP/Twitter