The EU has hinted that mortgages will become the first asset class in the world to receive preferential capital requirements based on their greenness.
In its Sustainable Finance Strategy, the European Commission said it will “propose to recognise that measures to enhance energy efficiency of a mortgage collateral can be considered as unequivocally increasing property values,” in the section dedicated to amending capital requirements.
In 2017, the Commission’s Vice President, Valdis Dombrovskis, identified energy efficient mortgages as a focus for a proposed ‘green supporting factor’, which would lower capital charges on assets seen to support the EU’s climate goals.
That sparked the Energy Efficient Mortgages Action Plan (EeMAO), which saw European banks defining parameters for ‘energy efficient’ mortgages, and creating a pool of eligible assets on which to perform risk analysis.
“It gave clear scientific evidence that energy efficiency…