Making real estate more sustainable is largely a matter for the real estate owner and investor. But in making the built environment more sustainable, banks and other financiers are just as likely to face opportunities and challenges. But what exactly is the role of financiers in this transition? And what steps can a financier take to make his or her financed buildings more sustainable? You can read more about this in this article.
Sustainability increasingly important to financiers
Sustainability now plays an important role in our society. Sustainability is also increasingly important to financiers. There are several reasons for this:
- Changing legislation
There will be a legal requirement for commercial real estate to have at least an EPC C by 2023. And by 2030, legislation will be further tightened with regard to sustainability. For example, a requirement to have at least an EPC A.
- Increasing awareness among customers
Customers are becoming increasingly aware of sustainability. This is reflected in the increasing demand for sustainable banking products, such as sustainable investments and green loans.
- Risk restrictions
Financiers usually finance the property on the basis of segment, location, EPC and sustainability. Using these elements, a risk perception is drawn up. Due to changing legislation and the risk that buildings may become unlettable if they do not comply with the stricter regulations, the property may lose its value. And this would obviously have a negative impact on the value of the financing.
Financiers have a great deal of influence on environmental pressure through the choices they make in terms of investments and loans. In turn, this can lead to pressure from the government, shareholders and society to do business responsibly. Sustainable banking products play an important role in this respect and contribute to a sustainable image.
From the strategic viewpoint of the financiers, it is extremely important to provide long-term financing on “green” real estate.
– Ilmar Bouwer, consultant at CFP Green Buildings
Financiers have a major impact on making real estate more sustainable
The demand for sustainability is actually increasing. But what can financiers do to boost sustainability? Financiers play a major role in the financing of real estate. Banks alone provide tens of billions in loans for real estate. This is where banks and other financiers can have a major impact.
Sustainable measures by financiers
Financiers can take various measures to boost sustainability.
- Imposing sustainability obligations on financing
The government is already imposing obligations on making buildings more sustainable. Financiers should also strive for sustainable real estate when providing funding. Circular buildings and/or energy-neutral buildings play an important role in this respect. Recognised sustainability measures can also be made compulsory for renovations.
- Financial boosting of sustainability
In order to boost sustainability, financiers can use a financial tool to convince investors and property owners that sustainable renovation/new construction pays off. For example, by issuing a green statement giving an interest rebate on the financing.
- Providing information
Financiers can help their customers to become more sustainable by making the required information available using various online or other tools. These include energy monitoring and the CFP software used by banks as a tool to gain insight into the current status of customer portfolios.
Sustainability is also the responsibility of owners and lessees
Although financiers can have a major impact on making real estate more sustainable, they cannot of course do so alone. Building owners and lessees also play an important role. After all, the risks borne by financiers are also the risks borne by customers. Sustainable financing therefore contributes to making the overall economy more sustainable.
Written by Ilmar Bouwer, consultant at CFP