Green Homes Accredited Finance Professional: Capacity building in the Smarter4EU project (Part 1 of 2)

Episode 1:

The European Union has set itself the goal of making the building sector more sustainable and thus transitioning to more energy-efficient, climate-friendly construction methods. A major challenge here is financing. This is where the EU-LIFE research and development project SMARTER Finance for EU (Smarter4EU), which the author actively supports as a member of the Advisory Board.

Text FH-Prof. Dipl.-Ing. Dr.techn. Anna-VeraDeinhammer, ÖGNI – Austrian Society for Sustainable Real Estate Management

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Green Homes Accredited Finance Professional: Capacity building in the Smarter4EU project

The European Union has set itself the goal of making the building sector more sustainable and thus transitioning to more energy-efficient, climate-friendly construction methods. This is underlined in particular by the EU’s Renovation Wave strategy, which aims to comprehensively renovate and decarbonize the European building stock by 2050[1]. Financing represents a major challenge here: The development of suitable “green” financial products and the population’s increased awareness of sustainable construction and renovation are key success factors for the upcoming transformation in residential construction.

This is where the EU-LIFE research and development project SMARTER Finance for EU (Smarter4EU), which the author is actively supporting as a member of the Advisory Board. It builds on the findings of the predecessor project SMARTER Finance for Families (SFFF) and develops new measures on this basis. The focus is on combining certified energy-efficient residential buildings(green homes) with attractive financing offers from the area of greenmortgage loans (green mortgages). In this way, investments in sustainability are to be made more transparent and assessable for financial institutions. Over 37,000 new residential units in Europe with a project volume of more thanEUR 10.3billion have already been realized as part of the predecessor project – Smarter4EU aims to build on these successes[2].

A key result of the work to date is the confirmed assumption that a genuine green transformation will only succeed if broad sections of the population show an interest in corresponding offers. Against this background, the most important goal of Smarter4EU in the area of capacity building and policy advice is to equip the key players – i.e. banks, construction companies, project developers, investors, providers of green construction products, local authorities and citizens – with knowledge and tools. The aim is to improve understanding of green financing approaches and thus increase demand for them and support them more actively.

The great added value lies in combining the findings from the SFFF project with the experience of the implementation partners – i.e. those organizations that already operate and support Green Homes & Green Mortgages programs (GHGM programs). Since many of the challenges of the green transformation are based on complex interactions in which different groups are mutually dependent on each other, broad-based capacity building is of central importance. Perhaps this is the way to break the current deadlock.

GHGM programs and their added value

In view of rising energy prices, ambitious climate protection targets and growing demands on housing and construction quality, Green Homes & Green Mortgages programs (GHGM programs) are attracting increasing attention. These initiatives combine tailor-made financing products with highly energy-efficient residential construction projects – the quality of which (or that of the project to be financed) must be proven in each case.

These programs represent a“quadruple win” for all parties involved: Banks, the construction industry, real estate buyers and society as a whole benefit equally:

• Financial stability and sustainability: Banks have a lower credit default risk with energy-efficient buildings. Home buyers and owners benefit from lower operating costs, which means that loans can be repaid more reliably. At the same time, banks meet regulatory requirements such as the European Banking Authority’s Green Asset Ratio.
• Energy efficiency and security of supply: Low energy demand means less dependence on energy imports and contributes to security of supply.
• Building quality and comfort: Higher building quality is reflected in living comfort – be it through a better indoor climate, lower noise pollution or the use of CO2-reduced materials.
• Health and environment: Green buildings use low-emission materials wherever possible and optimize air quality, which leads to better health and quality of life. At the same time, resources are conserved and COâ‚‚ emissions are reduced.

The fourfold benefits of these programs make it clear that green homes and corresponding financing generate holistic added value. Nevertheless, many stakeholders are still cautious – for example due to a lack of knowledge, lack of experience or uncertainty about new products.

Background information on obstacles to the implementation of GHGM programs and possible solutions can be found in part 2 of the series…

[1] European Commission (2020). https://eur-lex.europa.eu/legal-content/DE/ALL/?uri=CELEX:52020DC0662
[2] Smarter Finance for EU (2024a). https://www.smarterfinance4.eu/