Banks aim to cut carbon emissions in real estate portfolios, in line with EU guidelines
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As part of a growing array of Net-Zero regulations, the European Union passed its Energy Performance of Buildings Directive (EPBD). EPBD aims to achieve a fully decarbonized building stock by 2050. Major banks are starting to respond to these regulations.
For instance, several banks are now applying new criteria to loans for commercial real estate, which will influence the sector’s access to financing. These criteria focus on buildings’ carbon emissions and the anticipated costs of necessary upgrades to comply with new environmental regulations.
Read more: Banks anxious about growing energy-related risks in mortgage portfolios
BNP Paribas SA, the largest bank in the EU, aims to reduce the emissions intensity of its commercial real estate portfolio by as much as 41% by 2030. Other banks, such as Banco Santander SA, Barclays Plc, ING Groep NV, and NatWest Group Plc, have already implemented or are considering similar measures.
Roxana Isaiu, the chief product officer at GRESB, a company that provides ESG (Environmental, Social, and Governance) data and benchmarking, mentioned that her firm has recently begun meeting with bankers who are keen to understand and comply with new green building requirements, Bloomberg reported.
Although the European Union’s implementation of the EPBD will take several years to complete, it is already evident that buildings failing to meet the new standards risk becoming ‘stranded assets,’ meaning they may no longer be sellable or rentable. However, this also presents an opportunity for the industry to transition towards a more sustainable future.
The EU estimates that approximately 85% of buildings within its member states were constructed before 2000, and 75% have poor energy performance.
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