Greening our buildings is at the heart of the fight against climate change. Greener, more energy efficient buildings can also help to reduce the exposure to risk for property owners and the banks that finance them. Energy efficient mortgages can therefore be a powerful tool to incentivise investment in greener buildings. The new report launched by the EeMAP Initiative looks at a key part of the jigsaw for making energy efficient mortgages happen – establishing market standard energy performance criteria and an approach to measuring performance upon which lenders can base the mortgage.

With 97% of Europe’s buildings currently deemed inefficient, these risks are almost universal, affecting every mortgage portfolio. Given the current poor state of the European building stock, it is estimated that the rate of energy efficient renovation must treble – from 1% to 3% – if Europe is to meet its climate and energy goals. Mortgages account for around €7 trillion, or a third of the European banking sector’s assets, and are the best-known form of property finance for consumers. This makes energy efficient mortgages a powerful economic incentive to tackle the risks from poor performing buildings. This report marks a first for the sector; setting out a new market standard and a clear pathway for banks to follow to begin addressing the problem of poor performing buildings in their mortgage portfolios. In doing so they will help to create a more sustainable property sector for future generations.

Central to the design of energy efficient mortgages, is establishing criteria for measuring buildings’ energy performance, the focus of this report. The criteria have been developed to deliver the risk reductions and wider benefits that different market actors expect and to ensure that energy efficient mortgage products are fit for purpose. They are shaped with the input of more than 500 experts across Europe. They are currently being tested by 37 major European banks as part of the Energy Efficient Mortgages Initiative pilot scheme.

In establishing a common set of measurement criteria, the report defines a product that will reduce risk for both borrowers and lenders, driving forward improvements to millions of buildings across the region.