– A few years ago, green financing as a mechanism supporting the transformation of the ESG real estate market would be a niche curiosity (…) Today it is already a real mechanismwhich translates sustainable development into specific financing options – At the Green Finance Breakfast organized in Warsaw, Jolanta Panas from the advisory company JWA, an expert in the area of sustainable development, real estate and finance market, spoke.
The maturity of the area of sustainable finances is based on the guidelines and standards developed for several years, but also public EU regulations, with a high -profile taxonomic regulation (EU taxonomy) at the forefront. The speaker pointed out that the interchangeably used concepts of “balanced” and “green” financing, Although close to meaning, they are not identical to each other.
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Benefits for people and planet
– Sustainable financing means money invested in projects with a positive impact on the environment and society. In addition to profit, money must also generate benefits for people and planet. In turn, green financing is the part of sustainable finances that focuses on environmental issues – she noted, illustrating this with examples from the real estate industry. Sustainable financing instruments could count the designs of housing estates containing green common spaces, while “the” installation of renewable energy sources or improvement of the energy efficiency of buildings would be enough to green.
In both branches, the purpose of financing can be intentional with a specific use of revenues or general, where the conditions for granting funds, i.e. the amount of the margin, depends on meeting the goals. As for the banks themselves and other financial institutions, the degree of their involvement in green investments is determined by the indicator Green Asset Ratio (GAR), which shows what percentage of assets was intended for taxonomic purposes – alleviating climate change and adaptation to it.
“Mature phase of development”
The analysis of selected twenty European banks has shown that GAR is currently on average 2.4 percent, but the desire to improve the result is opened, however, opportunities for players from the real estate market. – Many buildings meet the requirements for adaptation to climate change, but, according to the purpose of it, they require improvement energy efficiency. This gives a perspective to obtain green financing – said Jolanta Panas. About 20 percent go to buildings in buildings. from green bonds.
In 2024, the global value of sustainable financial instruments was about EUR 820 billion, and the forecasts of the Credit Agricole bank speak about 900 billion in 2025. The world leaders last year were the US, China and Germany, from the guidelines and standards used, among others published by the International Association of Capital Markets (Icma) in 2014 Green Bond Principles (Rules for green bonds).
Green bonds, issued since 2007 to finance the objectives related to the development of renewable energy and strengthening of energy efficiency, are particularly popular, and Europe has the largest share in their market.
– In the years 2014-2020, broadcast green bonds It increased on average at an exponential pace. In recent years, there has been a slowdown that can be associated with geopolitical uncertainty, interest rate increases or regulatory uncertainty around the issue of ESG. However, they can be understood as the adaptation of markets to the new, more mature phase of development Panas interpreted.
The EU standard complements the previous ones
The Green Bond Principles standard (next to which they also operate such as Climate Bonds Standards or referring to granting Green Loans Principles loans) is most often used, at the end of 2024, however, another of a public character has become effective; adopted jointly by the EU Council and the European Parliament EU standard (EU GREEN BOND STANDARD).
– The new approach does not want to replace the old ones, but to unify it, introducing mandatory criteria with a stronger emphasis on transparency and reporting – explained Jolanta Panas.
Unlike Green Bond Principles, the EU standard strictly binds the criteria for “greenery” of financed projects with taxonomy requirements, and also imposes on issuers the obligation to publish detailed disclosures. ESMA (European Stock and Securities Supervision Office) and national bodies exercise supervision over the bond issue.
Awards for full compliance with taxonomy
In achieving balanced business criteria and adaptation to the requirements of taxonomy, real estate players help such organizations as the British BRE Group (Building Research establishment) or, on the Polish market, Susanibleable Investment Forum Poland (Polsif).
The President of the Association, Joanna Ałasa, noticed that sustainable financing focuses primarily on the impact of a given investment on its surroundings, when it comes to compliance with taxonomy, while financial institutions currently take into account primarily primarily criterion of a significant contribution to the implementation of environmental goals (Including, above all, alleviating climate change and adaptation to it).
– Applying the principle of not having serious damage or minimal guarantees is still quite difficult to assess. There is still no offers on the market that would reward full compliance with taxonomy. A good solution would be to introduce capital concessions, which is used, for example, in Hungary – said the representative of Polsif.
Investors who would show full compliance with taxonomy could receive lower costswhich, according to Alasa, could potentially give the entire market momentum. She added that the requirements for companies looking for green financing and interpretations of “taxonomy” should be unified.
Practical approach
Specific steps for investors from the real estate industry include a key analysis of climate risk and assessments of what adaptation activities will prove necessary. The investor should also obtain a testimony of the energy characteristics of the building, conduct an analysis of its entire life cycle – including specific materials used – and analysis of circusiness (use of secondary raw materials and possible to use again).
– Knowledge of taxonomy alone is not enough, because they are often very mysteriously formulated. The need for a practical approach and simplifications such as a taxonomic passport, which on the one hand confirms the fulfillment of technical criteria by a given investment – supplemented Małgorzata Szałek, a specialist for sustainable construction from the company.
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