This is an important part of the Energy Efficient Mortgages Initiative, which is aimed at delivering a standardised European framework and data collection process for energy efficient mortgages.
The idea is that energy efficient buildings and energy saving renovations will be met with favourable financing for homeowners and owners of buildings.
The pilot scheme is expected to last at least two years and 37 European banks are taking part. They have committed to test an energy efficient mortgages framework into existing product lines and processes. These banks will be joined in the pilot scheme by 23 other supporting organisations.
There has been an extensive consultation of major stakeholders in the lead up to this pilot scheme. It includes feedback gathered during a series of national roundtable events with banks, building energy performance experts, property valuers and utilities.
During the pilot scheme, lenders will be encouraged to report data relating to energy efficient mortgages for the purposes of analysing the impact of energy efficiency on credit risk. By doing this, the pilot scheme will be able to respond to the recently published Action Plan on Sustainable Finance in which the European Commission has committed to investigate the feasibility of incorporating sustainability considerations in the prudential framework.
This data collection and analysis exercise will be supported by a robust data infrastructure, the design and deployment of which also falls under the Energy Efficient Mortgages Initiative umbrella.
Welcoming the launch, Luca Bertalot, Energy Efficient Mortgages Initiative Coordinator, commented: “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.
“The large number of organisations participating in the pilot scheme currently represent 45% of the European outstanding mortgages which amounts to 21% of European GDP.
“More importantly, 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.”