Venice, 7 October 2024: Starting now, European Mortgage Federation - European Covered Bond Council (EMF-ECBC) and the Climate Bonds Initiative (Climate Bonds) can certify bonds that adhere to the European Union Taxonomy for sustainable activities in the EU’s largest economies. On Friday, the organisations signed a Memorandum of Understanding to enhance transparency, disclosure, and investment in energy-efficient finance, beginning in Germany, France, Ireland, and Hungary.
Under this new collaboration, EMF and Climate Bonds will work together to develop and promote standards and frameworks that align covered bonds with the EU Taxonomy, which provides a clear and comprehensive classification system for environmentally sustainable economic activities. Covered bonds, which are debt securities backed by a pool of assets such as mortgages, play a crucial role in the financial system, and aligning them with sustainability criteria will enable investors to establish genuine commitments to a low-carbon economy.
The key objectives of this partnership include:
Developing Best Practices: Establishing guidelines and standards to ensure that covered bonds meet the stringent requirements of the EU Taxonomy, thus enhancing transparency and credibility in the market.
Promoting Market Adoption: Supporting issuers in integrating sustainability criteria into their covered bond programmes, thereby increasing the size of the investible opportunity set.
Raising Awareness: Educating stakeholders, including investors, financial institutions, and policymakers, about the benefits and opportunities of covered bonds that align with EU sustainability goals.
Through this partnership, the EMF-ECBC’s Energy Efficient Mortgage Label (EEM Label) and the Climate Bonds Standard and Certification Scheme will work together to drive greater transparency in the green finance market. The EEM Label, a quality benchmark for energy-efficient mortgages, provides clear and reliable data on banks' loan portfolios, supporting investor due diligence and improving consumer confidence in energy-efficient buildings and mortgages. By providing this transparency, the Label contributes to de-risking of banks portfolios, the growth of energy-efficient investments and supports alignment with key regulatory frameworks, including the EU Taxonomy.
The Climate Bonds’ globally recognised Certification Scheme ensures that investments align with science-based criteria set by the Paris Climate Agreement, offering the financial market robust tools to evaluate climate risks and asset resilience. This joint effort will further facilitate access to green bond markets, improve the tracking of energy-efficient mortgage performance, and foster greater investment in sustainable, climate-aligned assets.
The collaboration between EMF-ECBC and Climate Bonds will reinforce the EEMI housing ecosystem and play a pivotal role in scaling up the energy-efficiency investment, making it more accessible and transparent for global investors and consumers alike.
Climate Bonds CEO, Sean Kidney said:
“Today’s agreement marks a pivotal moment in our mission to foster sustainable finance practices,” said Sean Kidney, Climate Bonds CEO. “By aligning covered bonds with the EU Taxonomy, we are not only supporting the transition to a low-carbon economy but also enhancing the attractiveness and credibility of these essential financial instruments.”
EMF-ECBC Secretary General, Luca Bertalot said:
“By interlinking well-established quality labels in financial markets, the market is able to boost sustainable investments, enhance transparency, reduce greenwashing and digitalise capital markets solutions, thereby speeding up transaction execution and innovation, whilst boosting trust and confidence. It is in this spirit that the Climate Bonds Initiative and the Energy Efficient Mortgage Label are joining forces to scale-up the flow of tangible financial resources to the climate transition.”
Contact:
Gabriel Carhart
Communications Specialist
Climate Bonds Initiative
Tel. +44 7546 645591
Gabriel.carhart@climatebonds.net
Luca Bertalot
Administrator
Energy Efficient Mortgage Label
Tel. +32 2 285 40 33
Notes to the Editor:
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The Energy Efficient Mortgage (EEM) Label was established in 2020 by the European Mortgage Federation – European Covered Bond Council (EMF-ECBC) as a clear and transparent quality label for consumers, lenders and investors, aimed at identifying energy efficient mortgages (EEM) in lending institutions’ portfolios, which are intended to finance the purchase/construction and/or renovation of both residential (single family & multi-family) and commercial buildings, with a focus on building energy performance. The first labels were issued in 2021 and as of February 2023, 31 lending institutions from 12 countries hold the Label covering 32 financial products. The development of the EEM Label was triggered by the EMF-ECBC’s work, in its role as Coordinator, on the Energy Efficient Mortgages Initiative (EEMI).
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Established in 1967, the European Mortgage Federation (EMF) is the voice of the European mortgage industry, representing the interests of mortgage lenders and covered bond issuers at European level. The EMF provides data and information on European mortgage markets, which were worth around 8.3 trillion EUR at the end of 2021 (EU27+UK). As of February 2023, the EMF has 14 members across 12 EU Member States as well as a number of observer members.
About EMF-ECBC
In 2004 the EMF founded the European Covered Bond Council (ECBC), a platform bringing together covered bond issuers, analysts, investment bankers, rating agencies and a wide range of interested stakeholders. As of February 2023, the ECBC has 120 members across more than 30 active covered bond jurisdictions and many different market segments. ECBC members represent over 95% of covered bonds outstanding, which were worth over EUR 2.9 tn at the end of 2021.
About Climate Bonds
Climate Bonds Initiative (Climate Bonds) is an international not-for-profit organisation working to mobilise global capital for climate action. Climate Bonds has played a central role in transforming the green bond market from a niche concept to a mainstream source of capital for sustainable development, driving quality of issuance through the development of science-based green definitions in line with the Paris Agreement. Climate Bonds was created with a vision to mobilise institutional investors to counter the short-termism and vested interests that infect politics and finance and undermine action on climate change. With a mission to mobilise global capital for climate action, Climate Bonds aims to educate, inspire, convene, and steer a global collaboration of institutional investors, governments, development banks and industry to shift capital toward low-carbon and resilient investments.