Energy Efficiency Financial Institutions Group. Comments by Jalil Boulahssas, Impact Investing Intern, University of Richmond

The Energy Efficiency Financial Institutions Group (EEFIG) – New Working Groups Webinar was held early Monday morning (Jan. 27, 2020) to address long term barriers to energy investment in Europe.

Led by Martin Schoenberg of the United Nations Environment Programme Finance Initiative, the webinar discussed the role of energy efficiency within sustainable finance as banks work to align their portfolios with the Paris climate change agreement.

As of September 2019, financial institutions and alliance investors have adopted principles for responsible banking to reach net zero emissions by the year 2050. As real estate loans form a large portion of bank asset composition, the energy efficiency of mortgages comes under focus as a significant point of improvement.

According to the EEFIG, the global economy must double its investment in energy efficiency by 2025 and double it again by the year 2050. Many European banks are looking to establish a standard definition of energy efficient mortgage, which is generally tied to crediting a home’s energy efficiency into its mortgage. These efforts are to be supported by the European Green Deal Investment Plan, an important facet of the overall European Green Deal. This plan seeks to mobilize a minimum of €1 trillion by 2030, unlock and incentivize private investments, as well as to support project promoters in their execution of sustainable endeavors.

After interest in increasing the amount of working groups within the EEFIG, there are now four new groups. These new working groups include the Financial Performance of Energy Efficient Loans, Financial Instruments, Multiple Benefits, and Communications/Dissemination groups. The Financial Performance working group looks to analyze energy efficient loans to assess their credit quality and the overall risk of such investments. Similarly, the Financial Instruments working group will aim to compare leading financial instruments to increase energy efficiency in various markets.

As they conduct their research, several benefits and communications groups will assess the benefits of energy efficiency on macroeconomic factors such as GDP and share the results with the global finance community.

(Ed note: for our work in this area from 2002-2006, see: https://www.creativeinvest.com/EnergyEfficientMortgageMBSJune2006.pdf)

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