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Wholesale Banking

Study: Analysis of the market maturity of the EU taxonomy test criteria for buildings

30 March, 2021 |
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Sustainability has long been a concern for the real estate industry. Nevertheless, the sector still accounts for around 40 percent of global energy consumption and global greenhouse gas emissions. To achieve the goal of a low-carbon economy, it is therefore particularly important to increase efforts in the sector and to include environmental factors and risks in financial decision-making processes such as funding.

In 2018, through the Sustainable Finance Action Plan, the European Union adopted the idea of a standardised European definition of sustainable entrepreneurial activities and investment products — the so-called EU taxonomy. In 2020, the responsible EU Expert Group for Sustainable Finance introduced taxonomy criteria in four areas of the real estate sector: construction of new buildings, building renovation, individual renovation measures, and acquisition and ownership of buildings.

In July 2020, the Green Building Council España (GBCe), the German Sustainable Building Council (DGNB), the Danish Green Building Council (DK-GBC) and the Austrian Society for Sustainable Real-Estate Management (ÖGNI) launched a study to evaluate the market maturity of the proposed taxonomy test criteria for the real estate sector. A total of 23 other financial market participants have contributed their expertise and market knowledge as study partners and applied the test criteria to a total of 62 buildings. The study has three objectives:

  1. Evaluate whether the test criteria are appropriate for the intended environmental impact of the taxonomy and identify all costs and benefits of implementing related processes for the European Commission and market participants
  2. Verify data quality
  3. Optimise the data collection process with regard to sustainability issues

"Real estate financiers can really make a difference here and accelerate the transformation to a low-carbon real estate sector. Above all, the study showed that we need harmonised benchmarks that are accepted among all market participants as well as easy access to data to guide the funding process in a sustainable direction and avoid green washing", says Alexander Piur, Head of Sustainability and Innovation at ING Wholesale Banking Real Estate Finance, who assisted with the study as part of the advisory board.

Read the full study here.