3 DEC 2018
RICS joined delegates at the UN climate discussions at COP24 (Conference of the Parties) in Katowice, Poland, supporting core initiatives to influence market transformation in the building sector, in partnership with leading stakeholders.
RICS stressed the importance of factoring in embodied carbon as part of countries’ Nationally Determined Contributions (NDCs), for setting science-based targets for buildings and construction; and for implementing the circular economy within the sector by building on its professional standard on whole-life carbon assessment for the built environment.
To deliver tangible financing solutions, RICS are in partnership with the 41 members of the Energy Efficient Mortgages (EEM) Initiative, who attended the Climate Summit to unveil the definition of energy efficient mortgages and launch a valuation due diligence checklist for mortgage lending purposes.
The shift towards ‘green’ mortgages and circular thinking in the real estate sector is gaining traction to respond to climate change. Therefore, RICS have been developing a comprehensive package including guidance, research, capacity building and strategic partnership to forge a two-pronged approach.
Our approach is essentially about equipping professionals with the necessary tools to reflect sustainability aspects within their daily valuation practice and at the same time to work with other organisations to sensitise investors vis-à-vis the risks of not future-proofing their buildings against forthcoming legislation and changing market trends. We therefore actually require the inclusion and consideration of these aspects as part of valuation reports.
RICS Head of Sustainability
RICS have played a key role in developing the Energy Efficient Mortgages Action Plan (EeMAP) definition of what constitutes an energy efficiency mortgage and developing EeMAP’s supporting tools, such as a valuation checklist and the accompanying guidance for mortgage lending valuers. Given the importance of the project for market transformation across Europe, it was presented by one of the project’s pilot-scheme banks as part of a dedicated Human Settlements Action Event on financing multi-level action at COP 24 this week.
It is estimated that across the EU, €100 billion will need to be invested annually in building renovation to achieve the region’s climate targets. Historically, financing energy efficiency was regarded largely as a public finance exercise. This will change rapidly with the participation of private sector funds, especially banks or specialist lenders for whom lending against real estate represents up to one-third of their loan book.
In view of the involvement of a significant and broad stakeholder base representing over 2000 banks; and value of outstanding mortgage loans in Europe over €6.8 trillion, the energy efficiency mortgage initiative has the potential to transform the European housing stock and help the EU meet its climate goals.
The definition is intended as a concrete response to the efforts of the European Commission to construct a capital markets union, to facilitate the clean energy transition in line with the Paris Agreements, and in this context, to build a financial system that supports sustainable growth. It will provide a market benchmark to operationalise the integration of energy efficient mortgages into the business lines of the 41 pilot lending institutions. At the end of 2017, these lending institutions represented 55% of mortgages outstanding in the European Union, equal to 25% of EU GDP, constituting significant critical mass in the market.
EEM is a market-led initiative, funded via the European Commission’s Horizon 2020 Programme, which aims to deliver a standardised European framework and data collection architecture for energy efficient mortgages, with favourable financing conditions for energy efficient buildings, energy saving renovations and anti-seismic measures.
The EEM Pilot Scheme was launched in June 2018, further to the engagement of market actors in a consultation process by way of national and European roundtable events. The pilot scheme lending institutions are supported by the EEM Advisory Council, which includes representatives from the European Commission, the European Investment Bank, the European Bank for Reconstruction and Development, the International Finance Corporation, The World Bank, UNEP Finance Initiative, the Scottish Government and Climate Bond Initiative.
RICS, as part of the Global Alliance for Buildings and Construction (GlobalABC) Buildings Action Symposium on 6 December at COP 24, insists on the importance of getting accurate sectoral climate data by considering both “embodied carbon emissions” as “operational to acquire an overall understanding of a built project’s total carbon impact.
Operational emissions result from energy consumption in the day-to-day running of a property, while embodied emissions arise from producing, procuring and installing the materials and components that make up a structure. These also include the lifetime emissions from maintenance, repair, replacement and ultimately demolition and disposal.
A whole-life carbon approach identifies the overall best combined opportunities for reducing lifetime emissions, also helping avoid any unintended consequences of focussing on operational emissions alone.
Contact Laura Lindberg, RICS, Head of Media & Communications, Europe:
t +32 2 739 42 27