Alignment Issues

As the European Mortgage Federation-European Covered Bond Council (EMF-ECBC) last month formally launched its Energy Efficient Mortgage (EEM) label concerns are emerging that the label is being driven forward potentially at the expense of environmental performance. While buildings are responsible for 40% of the EU’s energy consumption, the mortgage sector accounts for a third of bank portfolios and 44% of EU GDP and EEMs are intended to finance the purchase, construction or renovation of both residential and commercial buildings where there is evidence of: energy performance that meets or exceeds relevant market best practice standards, in line with current EU legislative requirements; and/or an improvement in energy performance of at least 30%.


Nevertheless, Ted Kronmiller of SMARTER Finance for Families – also a Horizon 2020 initiative, implementing green mortgage programmes across European countries – suggests that the label is being driven forwards potentially at the expense of environmental performance. “The EU taxonomy has ambitious sustainable finance goals for the residential building sector including thresholds to ensure substantial contribution to climate change mitigation and adaptation for new construction, renovation as well as ownership and acquisition activities. Yet some at the ECBC are arguing that the EU taxonomy standards are too high,” he explains.

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