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Green Mortgages
& Renovation Loans
A toolkit for Financial Institutions Paying less
for more!
Increase Asset Values
Reduced Mortgage Default
& Other Credit Risk
Improve Cash Flow for Borrowers
for their Green Homes
Assure expected green
performance through credible,
low cost, certification programs
Greater Environmental
Responsibility for our
Planet
SMARTER
FINANCE
FOR
FAMILIES |1
1
Introduction
A successful and growing initiative that combines
rewarding the greenest residential projects
with innovative, discounted green financing,
and awareness-building activities for homebuyers,
creating accessible and widely-promoted GreenHomes.
The solutions database helps project design teams find
and learn about your solution!
AMBER GARDENS BY ALESONOR. A NET-ZERO ENERGY HOME ELIGIBLE FOR A GREEN MORTGAGE
As of July 2020, the Green Homes program has certified has signed agreements to certify
over 10.000 housing units in Romania representing over €1.500.000.000 of residential
project value.
Executive summary
Supporting the creation of Green Homes residential projects that are is supported by leading academic institutions
through a credible, cost-effective environmentally-responsible and including the Université Libre de Bruxelles
certification pogram represents an energy efficient relative to the standard and the Copenhagen Centre on Energy
opportunity for residential investors & offer in Romania generating financial, social Efficiency; A partnership of the United
developers to differentiate the quality and environmental benefit. Increased Nations Environment Program and Danish
and environmental performance of their energy savings and other financial benefits Technical University.
construction projects while educating (such as improved occupant health and
consumers about the financial and wellness less frequent/ lower home repair costs) The introduction of such a financial poduct
benefits. Financial institutions – through substantially reduce the mortgage default is very timely in the context of the current
the issuance of Green Mortgages tied to risk allowing the lender to lower the
and impending European Directives
certified Geen Homes – can significantly monthly interest rate while maintaining
that require progress toward Net Zero
reduce their mortgage default risk and raise profit magins. This enables the home buyer
Energy Buildings, significantly reduced
the asset valuation of homes they finance to invest into a more energy efficient and
construction waste, and reduced toxicity
in order to offer a lower cost of financing. greener home while lowering their total
of building materials compulsory for all
Lower financing costs provides the monthly cost of ownership.
new and existing residential buildings.
homebuyer with greater purchasing Growing energy security concerns and
power to invest in improved construction rising energy costs reward residential
quality. As the Green Mortgage accurately The project is strongly supported by projects that require less costly and naturally
values the significant reduction in energy, the European Commission’s Directorate scarce resources to build and operate. By
repair and health costs of those who General Energy (DG Energy). It is also on contributing to the creation of certified
purchase Green Homes. Green Mortgages the forefront of aligning the green home Green Homes, residential investors and
also help the Romanian marketplace certifications with the Directorate General developers can greatly facilitate a rapid and
better evaluate the positive value of Environment’s (DG Environment’s) Level(s) profitable transformation of the construction
sensible borrowing to invest properly at the framework to include embodied carbon/ and real estate industry towards a low
beginning of the building process. Life-cycle Assessment and success carbon/green economy.
This initiative creates a consortium between towards a Circular Economy. The project
a bank, an investor/developer, a home is being implemented by Green Building
buyer and a certifier to certify green Councils and National Energy Agencies and
This work revised from 1 August 2014 is licensed to the SMARTER Finance for Families consortium, and the Romania Green Building Council
and under a Creative Commons Attribution-Non-Commercial-No Derivatives 4.0 International License.
For information please see
http://creativecommons.org/licenses/by-nc-sa/4.0/
This replaces the license from the version Romania Green Building Council created in April 2008.
2
Table of contents
Opportunities & challenges for Romanian homes 4
What is a Green Home? 7
Assessing green performance of projects to determine qualification for Green Finance 8
How does the “Green Homes certified by RoGBC” Program work? 9
What are the typical costs to the Project Developer for RoGBC’s Green Homes certification? 10
What is a Green Mortage? 11
How does the RoGBC Green Mortgage program work? 12
Green Mortgage Eligibility Process 13
Responsibilities & Benefits from the program 14
Other Benefits to Stakeholders 15
Assessing Renovation projects for eligibility for Green Finance products 16
Green Renovation Loan Eligibility Process 17
Risks and mitigating factors 18
EU Taxonomy 19
About the Romania Green Building Council 27
Authors and researchers of the Green Homes certified by RoGBC and Green Mortgage program 29
Frequently asked questions 30
Reference notes cited in this toolkit 31
Appendix 1: Multi-Family
Assessment criteria for Green Homes certified pojects New Construction & Major Refurbishment, Renovation & Retrrofits 32
Appendix 2: Single Family
Assessment criteria for Green Homes certified pojects New Construction & Major Refurbishment, Renovation & Retrrofits 35
Appendix 3
Financial example for Green Mortgages
36
Appendix 4 37
Selection of projects for RoGBC’s Green Homes & Green Mortgage program
3
Opportunities & challenges
for Romanian home
Romanian energy costs as a percentage of family income
are the 2nd highest in the European Union.
There is a direct correlation between the Another comprehensive academic study Health issues of the borrower or a family
energy efficiency and green performance found mortgage defaults were: member have material impacts on the
of a home and the level of quality in the ability to pay financial obligations. Holding
design, construction and operation of – 32% less likely if the apartment healthier homes in mortgage portfolios will
that home. Fear of bank financing often building is within a mile of protected have a material, positive financial benefit
leads homeowners to make suboptimal open space; from reductions in accidents like:
decisions and underinvest in the design – 34% less likely if the building is in a
and construction process (often choosing neighborhood with at least 16 retail – from bad lighting or mistakenly
homes only on the lowest “Cost per Square stores; and installed electric wirining
– 58% less likely if in an area where at – from exposure to volatile organic
Meter” value) and resulting in owning
least 30 percent of workers commute compounds (VOCs), formaldehyde,
homes that are more costly to heat and cool,
by subway/elevated train.2 asbestos, lead, mold, and radon
require more maintenance, more frequent
renovations, and subject to reduced long- through choosing healthier building
A study of over 1.6 million homes in North materials and utilizing proper insulation
term asset values relative to Green Homes.
America released in June 2014 concluded and renovation techniques; and
certified green homes have a 9% increased – from exposure to carbon monoxide
Certified green homes have a 9%
selling price relative to standard. The green and tobacco smoke from better
increased selling price relative to homes in the study averaged 20 to 30% ventilation.
standard. The green homes in the savings in energy and water use compared
to code-built homes. A lower level of code Sensible financing is the best choice to
study averaged 20 to 30% savings in and similar low energy prices indicate the bring forward the available resources early
market can expect similar price premiums/ into the construction process of homes.
energy and water use compared to
asset values for certified Green homes as This allows the homeowner to offset their
code-built homes. the study identified.3,4 early investment in quality and energy
performance (via monthly mortgage
Some of the most prevalent reasons for payments) with the enhanced savings (via
The most cost-effective moment to invest in reduced monthly energy and repair bills).
early damage to a home affecting ongoing
energy efficiency and other green features This allows banks underwriting mortgages
energy efficiency, visual appeal and asset
of a home is at its initial design and creation. to offer lower costs of financing without
value include insufficient and/or improperly
This is particularly true regarding the loss of profitabiliy due to better repayment
installed thermal and hydro insulation.
“building envelope” or the roof, windows rates and higher long term values of the
Green building solutions, by design and by
and walls which contribute substantially properties they finance. The points that
definition, must be durable and therefore
to energy efficiency performance but are follow ofer additional benefits from
reduce the frequency and severity of repairs
costly and problematic to improve after supporting greener homes.
to a home.
the initial construction is complete.
Buildings account for over 30% of total
In a 2013 study of 71,000 homes energy consumption and 40 to 50% of CO2
comparing default risks in Energy Efficient emissions in Europe.
and Green Homes to standard homes, a
32% reduction in mortgage default risk was The current building regulations and
found in the Green Homes. The study also achievement of an “A” on the Romanian Energy
found that homes that exceed the minimum Performance Certificate require only a low level
standard to be considered “green” for the of energy efficiency which leads to high energy
study exhibited an even higher reduction costs for the end-users during the period of
in default risk. The annual energy savings ownership. Furthermore, the energy audit
process is inconsistently applied and leaves
for green homes can be equal to one or two
little incentive for a developer/investor to aim
mortgage payments per year.1
for higher performance as they fear buyers
will not be able to recognize the existence
of superior building energy performance.
4
The Romania Green Building Council
– Significant restrictions on toxic organizes the Green Home Pavilion@
chemicals allowed in building TNI in partnership with the National Real
materials and requirements to
Estate Fair held twice yearly in Bucharest.
disclose all chemicals used in
The Green Home Pavilion showcases the
materials production (e.g. REACH
country’s exemplary green residential
legislation).
projects and the solutions that made
Sensible financial mechanisms such them possible. RoGBC also delivers
as Green Homes & Green Mortgage presentations about the financial, health
programes prepare the Construction and and others benefits of Geen Homes.
Real Estate industries for this impending
Key EU-driven legislation will dramatically legislation ensuring that green building
improve the quality, energy and green pioneers have the financial tools to deliver
performance of homes beginning now and homes to the market today or in the near
increasingly over the coming years. This future that include a strong business case
includes: for all stakeholders.
– Nearly “Net Zero Energy Buildings” Most countries - and all in the European
by 2020 requiring ultra low energy Union - require Energy Performance
buildings and energy use requiring
Certificates for new buildings and during
offset by production of green energy;
significant events for existing buildings such
– The amount of Construction Waste
as sales, rentals, and major upgrades. The
required to be diverted from landfill,
cost of the energy audit, therefore, no longer
currently ~25%, to be increased to
70%; and represents an optional or additional cost but home buying public and active real estate
a required cost of the real estate developer. developers and investors. Green Home
Pavilion@TNI has proven to be
the most popular exhibit at the tradeshow
and continues to add partner developers
and solution providers, demonstrating the
growing interest in sustainable construction
approaches in Romania.
The National Bank of Romania
joins The Network of Central
The EU Taxonomy for Sustainable construction of new buildings, renovation
Banks and Supervisors for
Activities1,2,3,4 ('EU Taxonomy') is a of existing buildings, individual renovation Greening the Financial System
classification system under which measures and the acquisition and (NGFS)
environmentally sustainable activities are ownership of buildings. The table below
defined to help investors, companies, demonstrates where the SMARTER
issuers and project promoters navigate the Assessment Criteria meets or exceeds the In October of 2020, The National Bank of
transition to a low-carbon, resilient, technical screening criteria and DNSH Romania (NBR) became a formal member
resource-efficient and sustainable Assessment for each building-related of the Network for Green the Financial
economy. The EU Taxonomy considers four economic activity addressed by the EU System as they move towards addressing
economic activities in the building sector: Taxonomy. the nexus between environmental and
financial risks with respect to top global
climate-related policy initiatives.
SMARTER Finance for Families: Assessment Criteria for Green Homes Certified projects:
(New Construction, Major Refurbishment, Renovation and Retrofits) X EU Taxonomy for Sustainable Activities: Cross-Evaluation
SMARTER Finance for Families
EU Taxonomy for Sustainable Activities
Mitigation Activities Adaptation Activities
They join over 80 central banks and
Assessment Criteria for Green Homes Certified projects:
New Construction, Major Refurbishment,
Constrution of New Buildings Buildings Renovation Acquisition and Ownership of Constrution of New Buildings Buildings Renovation supervisors in improving the analysis,
Buildings
Renovation and Retrofits
Technical Do No Significant Technical Do No Significant Technical Do No Significant Technical Do No Significant Technical Do No Significant
Screening Criteria Harm Assessment Screening Criteria Harm Assessment Screening Criteria Harm Assessment Screening Criteria Harm Assessment Screening Criteria Harm Assessment
management, and reduction of climate-
Environmental Leadership related and environmental risk in the
Ongoing Performance
Site & Location
banking sector. The NBR is moving
Water Efficiency
Materials and Resources
toward alignment and application of
Human Health & Wellness specific climate risk analysis tools within
Energy Optimisation
Innovation the financial stability policy framework
SMARTER Comprehensively Meets or Surpasses EU Taxonomy 26 70 23 65 23 65 165 65 165 57
organized in conjunction with the IMF 5.
SMARTER Assessment Criteria Exceeds EU Taxonomy for Sustainable Activities Technical Screening Criteria
SMARTER Assessment Criteria Meets EU Taxonomy for Sustainable Activities Technical Screening Criteria
5
What does the market think?
EnR feels that SMARTER Finance for
Families will be a benefit to the objectives
of the European Energy Agency due to:
An innovative approach to unlocking
essential, additional construction
Implications Need For Action budgets for residential projects
without elevating the monthly cost
Economic to homeowners/homebuyers.
In consideration of the previous facts and
The increasing energy costs and relatively
implications, engaging the financial Actions to improve the credibility and
insufficient energy efficiency in homes
industry, residential investors/developers appreciation of Energy Performance
will constantly be augmenting the strain
and those that provide the necessary Certificates as a valuable tool for
on households’ available monthly cash
solutions to develop energy efficient and important stakeholders such as
and limiting the ability to pay debt
environmentally-responsible homes are the banking industry, as well as citizens
obligations. Poor building quality increases
and government agencies charged with
maintenance/repair costs and reduces a necessary and economically-preferable
improving energy efficiency and
the future market value of homes in the solution to reduce the financial risk of mortgage
promoting green energy usage.
event they must be repossessed by the portfolios and “future proof” homes for
bank; raising potential losses of mortgage upcoming conditions in the near and The intent to better leverage public
portfolios and the cost of borrowing for financing by creating “hybrid”
long term. Banks’ mortgage portfolios
potential homeowners. solution to Energy Poverty that
will perform better if homebuyers select
promises to serve more citizens while
sensible, cost-effective homes with the making this challenging market more
Social long-term financial outlook of the property appealing to private sector banks.
Loss of energy subsidies without adequate considered at the time of taking the
preparation will affect all households and mortgage and purchasing the home. The Ilaria Bertini
all income levels. More so, this role of investors/developers and green
Head of ENEA’s Department
More so, this disproportionately affects the for Energy Efficiency
building solution providers in leading the
low and middle-income class as the energy
way is of paramount importance.
bill is a higher percentage of their income
and they generally live in lower quality
(hence lower energy efficient, albeit
smaller) houses.
Additionally, unstable energy security
reduces policy options to confront
aggressive petrol driven countries
leading to increased or prolonged conflic
We believe that the project “SMARTER
conflict.
Finance for Families” will contribute
significantly to meeting sustainable
Environmental
development goals through proposed
At the planned rate of construction, the measures to expand successful
negative impact on the environment Green Homes & Green Mortgage
of home construction is increasing programmes to new European markets,
significantly, as well as the stress on the and to develop essential supporting
stock of conventional fossil fuels and on the tools for these programmes.
supply of natural resources. Scott Foster
Director Sustainable Energy Division
Given a growing supply of conclusive evidence concerning
the challenges with the security and projected long-term
costs of conventional energy supplies, and the lower We think that collaborative efforts
putting together sustainability excellence
maintenance costs of green homes, ‘business as usual’ is with the banks to reward the lower
risk of greener homes with discounted
the risky choice for banks wishing to minimize risk in their interest rates will greatly help the
mortgage loan portfolios. residential market grow in the best
interest of all involved stakeholders.
Steven Borncamp Umberto Irti
Project Director, SMARTER Finance for Families Managing Director COAF SRL
Lead Author, Green Homes & Green Mortgage program
6
What does the market think?
What is a Green
Home?
We are confident that this project
would provide a great benefit to
our building industry and the citizen
building potentially attractive programs
to significantly increase consumer
engagement and uptake of Green Homes.
There are many valid approaches to creating Bioclimatic Design: Lighting, PhD Alexandra Velická
a Green Home but all are thoughtful in their Shading and More General Director
design, construction and operation to Green Homes use “bioclimatic design”
minimize or eliminate the environmental principles that include shading from the
impact of the home. Here are some of the summer sun and collecting the winter
main components of Green Homes: sun with thoughtful orientation of the
building and placement of the windows and
skylights. Deciduous trees drop their leaves
Energy Efficiency & Green Energy in winter to allow in sun and evergreen We have successfully collaborated with
Using “Bio-Climatic Design” principles trees keep their leaves to protect against the Romania Green Building Council
(explained further below), a superior harsh winter winds and “solar gains” in a joint implementation of green
“Building Envelope” with significantly from summer sunshine. Indoor lighting is finance initiatives and we believe the
improved insulation and better doors and designed to ensure a safe, productive, and activities supported by the SMARTER
windows, and more efficient Heating, warm environment with a minimum amount Project will have a crucial positive
Ventilating, and Air Conditioning (HVAC) of energy use. Designs that ensure natural contribution to our current and future
or natural ventilation and “Passive House” daylight enters the building without solar green finance offerings as well as help
approaches; a Green Home minimizes gains in summer contribute to a Green improve the building industry’s capacity
energy use. Introduction of Green Energy Home. to deliver better, safer and healthier
– either on the home itself or through homes to the Romanian customers.
specifying contractually the delivery of Construction Site and ongoing
Vladimir Kalinov
Green Energy through Energy Suppliers Property Management Vice President Raiffeisen Bank Romania
ensures the reduction or elimination of fossil The construction process of a green home
fuel derived energy. takes important steps to ensure the building
does not damage or destroy the surrounding
Location environment (reducing/eliminating erosion,
The construction of a green home does not protecting existing trees and biodiversity
utilize land with important contributions on the site). In addition, residents receive
to biodiversity or a city’s green space. The information and have facilities (e.g.
location reduces transportation impacts by Composting area, Recycling Collection Helping projects with energy efficiency
having access to public transportation or rail area, etc.) to operate their homes in an and green performance differentiate
or bus terminals and/or is in a “walk-able” environmentally-responsible manner to themselves from their competitors using
community with the homeowner’s needs for ensure the home over time has a neutral to credible energy performance certificates,
shopping, dining, schools, etc. nearby. positive impact on the planet. Landscaping green certification and significant
is created using prolific and indigenous energy efficiency measures in general
Sustainable & Healthy Materials plants to minimize “Urban Heat Islands”, is part of our Green Lending strategy.
Green Homes utilize materials that are as well as reduce the need for pesticides, Our organization will participate in the
nontoxic to the home’s occupants and safe fertilizers and irrigation systems. planned education and capacity building
in their production. Heavy construction activities to support Green Housing loans.
materials are chosen that are manufactured Other Green Design Principles
David Gabelashvili
close to the construction site to minimize Green Homes are designed to be durable
Director JSC ProCredit Bank Georgia
transportation impact. Materials that to minimize repairs and heavy construction
work if future needs changes. Smart design Levan Khmiadashvili
contained recycled materials or, better, Energy Efficiency Expert
creatively “up-cycle” or “re-purpose” allows for different uses of the home as
items that might otherwise end up a family’s needs change or new owners
as waste should be included. Durable arrive with different needs. Green building
materials mean less repair costs, principles demand better planning efforts
less construction waste, and reduced and “Integrated Design” of the different
environmental impact over time. disciplines to ensure optimal results,
maximizes the use of space, avoid costly
Indoor Air Quality construction mistakes, and minimize waste
Homes’ Construction and Renovation
Technology solutions and natural ventilation
Green Homes Scorecard using ambitious energy efficient
(or both) are employed to ensure air is both
This scorecard of criteria (see Appendix 2) and green standards will create
healthy and pleasant. Paints, other coatings
provides a full understanding of the criteria opportunities for greener energy
and adhesives are chosen that do not
that need to be achieved to be certified as sources as well as assist out citizens
introduce toxins into the home.
a Green Homes approved project. in the form of lower energy bills and
The scorecard for both single family and greater heating and cooling comfort,
multi unit homes are available in Appendix II combating energy poverty.
of this toolkit. Ivaylo Aleksiev
Executive Director
7
Assessing green performance
of projects to determine qualification
for Green Finance
There are two types of processes to be The second type of process to be considered
considered when assessing the eligibility includes smaller renovation projects where
of projects for Green Finance products. homeowners’ scope of work does not
allow the full range of green criteria to be
The first process includes full or holistic applied yet still deserve to benefit from
projects where the green assessment Green Finance products. Here lenders can
would provide a certification of the entire incent the purchase and finance of building
project. This type of assessment would be materials, products, technologies and
most suitable for projects including: services which have substantially improved
environmental qualities. The substantial
1. new construction of a number of projects and relatively low
homebuyer’s own home investment value may make these projects
less practical to provide a dedicated Green
2. new construction by a professional Homes assessor. For these projects, a selection
developer of a multi-family apartment of “pre-approved” solutions that qualify for
complex, townhomes or villas for resale or green financial products is appropriate.
3. a “deep” renovation by a homeowner
or professional developer resulting in This process is described in the section
a substantially changed residence and entitled “Assessing Renovation projects
likely necessity of a secured mortgage for eligibility for Green Finance products”.
(e.g. >10.000EUR of investment)
This process requires a dedicated Green Homes
assessor and Energy Auditor to advise on the
required criteria and certify the achievement
of this criteria upon project completion. This
type of process is particularly useful for a
new construction as a larger number of green
criteria can be implemented in the project
(including, for example, choosing land with
little or no environmental impact, good public
transit connectivity, and walkable proximity
to essential and desirable amenities).
This process is described in the next section
entitled “ How does the ‘Green Homes
certified by RoGBC’ program work?”.
8
9
How does the “Green Homes
certified by RoGBC” program work?
The advisory and certification process works Registration and signing the Designation of the residential
to ensure, a real estate investor/developer/ “Pre-Certification Agreement” project as a “Green Homes certified
homeowner building or renovating a home The Project Developer wishing to proceed by RoGBC” approved project”
(hereafter referred to as “Project Developer”) with the Green Homes certification by RoGBC upon project completion, RoGBC and a
successfully meets the program’s criteria registers the project and pays the registration qualified energy auditor review the project
(listed for both Multi-family and Single-family fee. The RoGBC, working with the project as constructed to confirm the criteria as
residences in Appendix 2 of this document). team and the information already collected agreed in the Pre-Certification Scorecard
The process includes a close collaboration at the Pre-Certification Review further have been achieved. The RoGBC will check
between the Romania Green Building Council, defines the achievable criteria. The Project that the new owners are provided adequate
the Project Developer seeking certification Developer and RoGBC agree upon which information to operate their home in an
for their project, and the project team and criteria will be achieved that provide the energy efficient and green manner. The
solution providers who will undertake the minimum score necessary and all mandatory project team is provided the final scorecard
necessary actions. The Steps include: requirements to satisfy the established and either a notification of successful
criteria of a Green Homes certified project. certification of the project or indications of
remaining corrective actions to be taken.
Planning a Green Residential
Project – Preliminary Review A “Pre-Certification scorecard” is signed by the
Project Developer indicating the actions to be
Project Developers considering certifying taken and the method upon which they will be Offer a Green Mortgage to Home Buyers
their project can request a “Pre-Certification assessed. U pon the signing of this document, Projects pursuing the “Green Homes
Review” with RoGBC to – in a no cost or low the Project Developer can begin to market certified by Romania Green Building
cost manner – quickly assess the feasibility of their project as “Green Homes Pre-Certified Council” designation should discuss early
obtaining a Green Homes certification by RoGBC. by Romania Green Building Council” informing in the process with participating banks who
The Project Developer meets with the RoGBC potential buyers about the program and the agree to underwrite Green Mortgages that
to discuss the project (site location, building green criteria they are pursuing. For those receive discounted financing costs based
or renovation approach, energy performance, projects eligible for RoGBC’s Green Mortgage on the green performance and reduced
pricing target, etc.) they intend to pursue. The program offered with a partner bank, this is also operating costs of the homes (see “What is a
process includes an estimated 2 hour meeting an indicator that this potential financial benefit ‘Green Mortgage’?” in the next section).
from which the RoGBC will produce an initial can be mentioned (see “How does RoGBC’s
indication of the feasibility in a point-by-point Green Mortgage program work?” section below Monitoring of the Program
comparison with the established criteria.
Recipients of Green Homes certification agree
NOTE: Project Developers are strongly advised Guidance toward a Green Homes to share energy cost date of their homes and to
to begin this process as early as possible, even certified residential project operate the units as advised upon purchasing
before a site has been selected. Projects that have the home. The data will be useful to inform
The RoGBC and a qualified energy auditor,
already begun construction can be considered for the various stakeholders of the environmental
whose work is verified by RoGBC’s trusted
the RoGBC Green Homes certification program, and financial outcomes of the program
energy auditors, meet and advise the
but they will be held to the same requirements as project’s design team throughout the design, and contribute to future improvements.
projects that pursued certification from inception. construction, and commissioning process to
guide the project to successful achievement
of RoGBC Green Homes criteria. Using criteria
agreed to be pursued as listed in the
Pre-Certification Scorecard and encouraging
“Integrated Design”, the process is designed
to ensure projects meet or exceed compliance
with the program’s requirements and produce
no negative surprises at the conclusion of the
project. Through the RoGBC’s “Green Homes
Approved Solution Provider” program, project
teams can readily identify companies with
the technology, materials, and other products
and services that will contribute to achieving
the necessary green criteria for the project.
9
What are the typical cost to the
Project Developer for RoGBC’s Green
Homes certifications?
The program is designed to expedite and
encourage widespread adoption of greener Multi Family Apartments Non-Members RoGBC Members
industry practices. The program has a very
modest price structure designed to provide
the necessary resources to administer a high- Pre-Certification Review €150 FREE
quality coaching and certification process while
not causing an undue burden on the partners Registration €1,100 €875
participating in the program.
Certification €65 per unit €52 per unit
For Homebuyers
There is no cost to participate to the homebuyer.
They are, in fact, rewarded substantially through Integrated Environmental Assessment €4,225 per building €3,575 per building
a lower monthly cost of ownership and better
quality, healthier home than the standard offer. The full project must be certified (i.e. not only those units that are transacted via a participating
banks’ Green Mortgage offer).
For Residential Investors/Developers
The following table includes the total fees to
certify a residential project. The Pre-Certification
fee, if any, is due prior to initiation of the review.
The Registration fee includes creation of the Pre-
Certification agreement signed between the Single-Family Housing /
Non-Members RoGBC Members
Investor/Developer and RoGBC. Detached Units
Pre-Certification Review €150 FREE
Registration €700 €200
Certification €475 per home €375 per home
Integrated Environmental Assessment €2,400 per home* €2,000 per home*
* Cost is per unique home plan that requires separate evaluation (i.e. this is only charged once on
multi-unit projects replicating the same plan and construction approach)
Note:
Fee structure valid for Projects Registered with initial fee paid by 30 April 2020. To ensure an accurate, mutual
understanding, investors/developers are encouraged to discuss the project’s fee structure at the Pre-Certification
review. Reasonable Travel expenses, if necessary, must be reimbursed. The necessity of travel will be determined at the
Precertification Review to ensue full understanding of the costs prior to initiating the full cerrtification process.
10What is a Green Mortage?
A Green Mortgage is a unique home
mortgage product offered by participating
banks that reward the purchase of a
certified Geen Home with a discounted
interest rate due to the reduced mortgage
risk default and higher home values
associated with Green Homes versus
standard homes.
Per the definition above, a certified Green
Homes residential project will have
significant educations in the utilities and
repair bills allowing households to save
extra cash that can be applied to paying
back their mortgage. This additional
monthly income for the homeowner
significantly reduces the risk of mortgage
default from the owner of a Green Home
compared to standard homes. In return,
the bank reduces the monthly interest rate
relative to similar products for standard
homes due to the improved default risk
and higher asset values of the Green
Homes in the Green Mortgage portfolio of
the bank. The Green Homes certifcation is the indicator to partner
The “total monthly cost of ownership” banks that the residential project has been assessed upon
completion and satisfes the necessary criteria to receive the
of the home is, however, reduced as
fnancial beneets of a Green Mortgage.
the monthly energy savings and lower
mortgage interest rate offset the
slightly larger loan required for the
purchase of a Green Mortgage qualified
While Green Homes require a new
approach, they do not necessarily result
in increased overall project costs. We
can, however, consider an additional
investment of 5 to 15% for construction
costs as a potential premium for a home
to reach the quality, operational cost
reduction and environmental performance
of a Green Home. The “total monthly cost Our program conducts workshops and
of ownership” of the home is, however, creates an educational brochures in 11
reduced as the monthly energy savings languages for home buyers to be informed
and lower mortgage interest rate offset on the financial health and other benefits of
borrowing responsibly to buy a green home.
the slightly larger loan required for the
purchase of a Green Mortgage qualified
home. Any green construction cost premium
largely contributes to the quality of the
construction. This allows the investor/
developer to recoup any additional
investment to maintain profit margins
without increasing the monthly ownership
cost to the home buyer facilitating the
transaction.
11How does the Green
Mortgage program work?
The Green Mortgage is delivered Identifying Partner Banks through the Green Mortgage program.
through a consortium between The Certifier and prospective Partner It is the sole responsibility of the
Banks agree to jointly administer Investor/Developer to achieve all of the
a participating bank, a real
and promote the Green Mortgage necessary criteria upon completion to
estate investor/developer enable issuance of the Green Mortgage
program. The program is made
agreeing to meet the program’s available to all qualified banks offering product. All advertising of interest rates
criteria, a home buyer seeking home mortgages who agree to the must conform to local law.
the benefits of the program, required criteria. The Partner Bank
and the Certifier who guides will continue to be responsible for
Completion of Project, Certification
all financial due diligence associated
the process and evaluates the with its normal underwriting process.
and transacting Green Mortgage for
project upon completion. Home Buyers
The Partner Bank will agree to accept
the Certifier’s criteria and process Upon analysis and successful
of certification of that criteria being achievement of a project as “Green
met as valid to determine residential Homes certified”, the Certifier notifies
projects qualified to receive the the partner bank(s) that the project
beneficial terms of a Green Mortgage. is eligible to receive the discounted
The Partner Bank also agrees to offer terms of the bank’s Green Mortgage
a substantive interest rate reduction product. The underwriting process
commensurate with default risk is similar to the partner bank(s)’s
Luca Bertalot reduction and enhanced long term standard procedure from this point
Secretary General of the European asset value of Green Mortgage- forward.
Mortgage Federation
qualified homes. This discount NOTE: while the Green Mortgage terms are made
supporting Green Mortgage program available only upon the Certification after the project
and presenting at “Changing Finance, must be significant relative to the
has been completed, Investors/Developers must
Financing Change” Workshop. normal market offer and not offset confirm with the participating banks at the inception
by additional fees and be upheld of the project that the bank(s) are willing to issue
throughout the life of the mortgage. mortgages for the project and would extend the
benefits of a Green Mortgage should the project qualify.
Promoting Benefits for
“Pre-Certified” Green Homes Monitoring of the Program
The Investor/Developer agrees, at the Borrowers benefiting from Green
beginning of the development process Mortgages will agree to supply annual
to create a residential development energy and water usage data to the
subject to the Green Homes Criteria and Certifier, confirm the installation
signs a “Pre-Certification Agreement” of energy efficient appliances post-
(see “How does the “Green Homes” occupancy, and be subject to retesting
program work?” section above). The of indoor air quality and water quality.
investor/developer meets with the
Certifier and Partner Bank(s) to This data will be shared with the
discuss including the project in their participating banks to compare
Green Mortgage program. Upon predicted versus actual green
The Green Homes &
Green Mortgage program these partners’ agreement and an performance and to determine
is included as a Case accepted and signed “Pre-Certification continued eligibility for a discounted
Study in a green finance
guide from the Energy agreement”, the developer/investor mortgage. Additionally, the partner
Efficiency - Financial can begin to market their project as banks will share information on
Institutions Group established by the
European Commission’s DG Energy and the
“Pre-Certified for Green Homes” and portfolio performance comparing
United Nations Environment Programme informing potential buyers they will their Green Mortgage to standard
have a special discount on financing mortgage results.
1213
Green Mortgage
Eligibility Process
Project
Developer
RoGBC
Assessor Pre-Certification
scorecard Project
Energy
Auditor
Home(s) in
construction
Bank
Green
Mortgage
Product
Final score Home(s)
card completed
RoGBC collects annual Home(s)
energy data and shares in use
with the Bank
13Responsibilities and benefits
of Stakeholders of the Green
Mortgage program
Provides assurance long term
energy performance & other
cost savings from green
features will be delivered
Cer
ank tifi
er
gB &
Delivers homes
a tin Higher disposable E
ne
with reduced risk of income from energy
p
ici
rg
mortgage default & other costs savings
y
rt
& higher long-term applied to mortgage
Au
Pa
asset value repayment
Ensures practical
dito
Ensures residential
benefits &
projects meet strict
provides green
energy performance,
r
mortgage
green and quality
approved status
criteria
that can be
realized or passed
on to new buyers
Implements
energy efficiency
& green criteria
Shares cost savings
P ro
Enables higher
from lower risk with
r
initial purchasing
ye
homebuyer via
jec
power of
Bu
discounted mortgage
homebuyer
tD
ev
e
el m
op
er Ho
Invests in quality, Sells energy
energy efficiency and efficient/green homes
green home at equal or lower
performance total monthly cost
of ownership
G re rs
en H de
om es Solution P rov i
Delivers best-in-class Green Homes solutions to help Project Developers
achieve the necessary energy efficiency and green homes performance to deliver to Home Buyers
see https://greenhomes.solutions/
14Other Benefits to What does the market think?
Stakeholders
We will fully support this effort including
enrolling our latest project “Gelovani
Project” into the “Green Homes & Green
Mortgage programme” to certify its
energy and green performance.
M2 creates new standards of quality
General benefits of the project and comfortable living in Georgia. We
are in a constant search for innovative
ideas which would elevate optimal
– Elimination of the initial cost barrier for – The “rationality problem”: people do not
design of residential areas and
implementing energy efficient residential always act rationally in their economic
construction quality to new heights.
projects; interests when assessing short-term vs
long-term benefit. Introducing a Green Irakli Burdiladze
– Overcomes other market failures that
and Energy Efficiency component into CEO JSC M2 Real Estate
seriously inhibit the construction of
financing brings a new incentive that
greener, more energy efficient homes
transforms long-term benefits ino short
including:
term (monthly) benefit; and
– The “agency problem”: the different
– Demonstrates a concept that can be
interests of the developer and buyer are
replicated and scaled upward.
aligned though bank financing;
Mortgage
Certified Geen Homes require due
– The “information problem”: lack of
consideration of indoor air quality,
understanding of some home buyers In 2017, our organization took the first
elimination of toxic building materials
of the reduction in the overall life-cycle major step to promote energy efficient
including paints, other coatings, adhesives
costs due to energy efficiency measures buildings by launching our Green
and flooring, superior and efficient lighting
is overcome by the energy audit, green Mortgage product. Considering the
quality, and other attributes that ensure a
criteria, coaching through the process and significant share of residential energy
more healthy, enjoyable and valuable home.
bank financing; consumption, the widespread usage of
green mortgages will contribute greatly
to Turkey’s energy efficiency targets and
its transition to a low-carbon economy.
Murat Atay
CEO Garanti BBVA Mortgage
The project will also bring important benefits 0 all stakeholders
For the investor/developer, this For the bank, this program provides For the home-buyer, this program
program provides provides
– Introduction of a new financial poduct
– Market differentiation as the Certified with predicable costs and revenues – Benefits fom a higher-quality and energy
Green Homes program is the only allowing differentiation in a highly efficient house with a net positive monthly
significant, project-level indicator of competitive banking market; financial benefit from energy savings and
quality, long-term cost savings, and green a discounted mortgage interest rate;
– Reduction of risk of mortgage default
performance on the local market;
in the bank’s mortgage portfolio via the – The health attributes associated
– Assurance of increased buying power of introduction of loans underwriting homes with Green Homes include reduced
interested home-buyers; and with lower energy and maintenance costs, exposure to toxic materials (including
and higher asset values; carcinogens) and, for example, reduced
– Increased demand for a unique market
incidence of asthma. Over the length
offering and competitive advantage (as – An effective program that aligns the
of homeownership, this can provide
the home-buyer will not feel the burden of banks’ social and environmental
significant financial benefit by lowering
the increased initial costs that are covered responsibility objectives with the types of
medical costs and reducing work days lost
by the loan). preferred projects they choose to finance;
due to illness;
– Demonstration of the bank’s recognition
– A higher price in case of reselling the
of the higher value of green buildings in
house due to a high “A” score on the
terms of income security, quality, and
Energy Performance Certificate, additional
market value; and
green criteria and the associated quality
– Contributes to significantly impoving improvements.
the environmental responsibility of the
construction and real estate industry
that also improves energy security and
economic opportunities from a low carbon
economy.
15Assessing Renovation project
eligibility for Green Finance
products
For renovation projects, The RoGBC process assumes the limited Request for Inclusion
financial investment in renovation projects (as of an Unapproved Solution(s)
where the scope of work compared to full, new construction or “deep” While a sufficient list of approved solutions is
is limited, green financial renovation projects) requires a methodology intended to accommodate most renovation
to minimize green assessment costs as a plans, Project Developers may desire to utilize
products, focus on percentage of total project costs. Therefore a other products, materials, technologies and
process to include both an automated portal services not yet approved for use as a “green”
where pre-approved products can be selected solution. RoGBC is prepared to quickly assess
1. Pre-approved lists of by Project Developers and a separate process to these ad hoc requests and issue appropriate
products, materials, assess solutions not yet pre-approved is utilized guidance to the Project Developer and
to efficiently and accurately ensure the desired bank as to the eligibility of the solution.
technologies, and green performance in a cost-effective manner.
services that improve the For general project guidance, a RoGBC
Green Solution Selector Tool Green Homes Help Desk is available to
green performance of a This Tool is a web portal with an easy to use assist homeowners achieve their objectives
renovated property and interface that allows the Project Developer of a high quality, green renovation.
to quickly review eligible solutions for
2. Additional products, materials, their project and to contact the solution
provider for further information.
technologies, and services
desired to be utilized by
the Project Developer
that must be evaluated
by competent experts to
determine if it is appropriate
as a “green” solution.
16Green Renovation
Loan Eligibility Process
Project Green Solutions
Developer ▪ Doors & Windows
▪ Paints
▪ Flooring
RoGBC ▪ Ceramics
Assessor
▪ Insulation
▪ Heating, Cooling & Ventilation
Auditor* ▪ Green energy Green
▪ Other green solutions
Solutions
Selector
*If necessary Tool
Seeking Use of
unlisted pre-approved
solution materials
use
RoGBC
approval
Renovation
Plans
RoGBC
Help Desk Loan
offers guidance Application
Process
for Renovation
projects
Bank
Renovation
Construction
Completed
Renovation
17Risks & Mitigating Factors
Lack of demand for housing, green or Furthermore, close participation of the solution We have reached a critical point
otherwise providers contributing to the pilot projects where the risk of “business
ensures that issues will be resolved quickly.
Lastly, the Green Mortgage requirements to as usual” with respect to
This is related to the general state of
the market and not the Green Mortgage share ongoing energy performance on other financing new homes introduces
program. A Green Homes certified poject operational data will provide continuous significant future risk compared
should, ceteris paribus, have a higher feedback to the construction industry
to instituting changes that
demand than regular buildings in every improving the required skills to introduce best-
in-class green solutions. improve the performance of the
market situation; a fact demonstrated by
strong sales of the first generation of green residential projects regarding
residential projects. energy use, resource use and
Falling energy prices
construction quality. There is a
Overestimation of the energy efficiency Despite persistent macroeconomic significant opportunity to pre-
savings by the certified audiors challenges, energy prices and energy empt the impending challenges
scarcity are predicted to go substantially by participating in a sensible
The Green Homes certification pocess is higher. An increasing willingness of the EU
and local government to “price carbon” and
and conservative approach to
carefully constructed to ensure planned
objectives deliver expected results. The tax inefficient behaviour greatly reduces reducing risk in the housing
energy auditor and the Certifier assessor the likelihood that the energy price to the market via greener construction
must be engaged at the earliest possible end consumer will decrease. Dramatic
approaches.
moment to instruct the design team on technological advances in “green” energy
likely outcomes of their decisions. This might reduce long term prices but the wide-
risk is also mitigated by choosing energy spread, positive economic benefits that
auditors for the project who share the would accompany this welcome scenario
goals of estimating and realizing energy should clearly outweigh the smaller
savings rather than “checking the box” of an differential in expected financial savings
administrative task. from energy efficiency measures.
Lower than expected performance of
energy savings equipment and installations
delivering less energy savings
The Green Homes program’s requirements
to achieve a top energy score provide strong
assurance that the building will perform to
expectations. Critical components of green
homes ranging from effective insulation
and high efficiency Heating, Ventilating, and
Air Conditioning (HVAC) equipment must
function correctly to achieve the promised
economic performance necessary to reduce
mortgage default risk.
Solutions recommended for the program
have been thoroughly researched,
implemented elsewhere with clear results
and, in the case of most systems, backed by
manufacturers’ guarantees.
18Key Policy Initiatives: Green
Residential Real Estate Finance
Key Policy Initiatives: Green Residential Real Estate Finance
Central banks, supranational regulators, bank type. Instead, it must be viewed in a multi- development of a sustainable financial sector
supervisors and the global financial sector disciplinary paradigm as it is embedded in and innovation in sustainable financial
have recognized the nexus between every traditional risk-type including credit, instruments.
environmental and systemic risk and joined market, liquidity, funding, underwriting,
forces to create a sustainable finance reputational and strategic risks8,9,10.
ecosystem that supports the transition to a The SMARTER Green Homes Green Mortgage
While the financial markets have been able to Program provides financial institutions the
thriving and regenerative global economy6,7. quantify environmental risk through a wherewithal to capture the scale of
As there's increasing convergence on 'greenium' on financial instruments, sustainable residential real development
standards for identifying, measuring and environmental risk must be addressed at the projects demanded by institutional investors
analyzing environmental risk there's initial stages of a real estate project to avoid along with robust environmental
increased ability to minimize such risk. the risk of stranded-assets on a portfolio- performance data-sets to meet increasingly
Environmental risks including transition and level as well as addressed on a firm-wide high expectations from the regulatory and
physical risk translate directly into increased basis to avoid strategic and reputational supervisory arena - while providing citizens
financial risk. With increased focus on the risk¹¹. with environmentally performant homes and
relationship between environmental and Global policy makers are adopting providing society with an increasingly
financial risk by the financial sector, the transformative agendas to support common sustainable building sector.
climate-focused arena and real estate definitions of sustainable economic activities,
development industry, environmental risk progress towards a sustainable transition,
can no longer be viewed as a discrete risk- mobilization of capital towards sustainability,
EU Taxonomy for Sustainable Activities
The EU Taxonomy for Sustainable depicted below (figure 01). The SMARTER Green Homes and Green
Activities12,13,14,15 ('EU Taxonomy') is a EU Taxonomy: Steps for Alignment Mortgage Program provides a suite of
classification system under which analytical capabilities for deeper
environmentally sustainable activities are Fig. 01
Do no
understanding of the environmental
Contribute Comply with Comply with
defined to help investors, companies, substan ally to one
significant
harm to any minimum technical
performance to each stakeholder group
or more of the six
issuers and project promoters navigate the environmental
other
environmental
social screening necessary for aligning with such initiatives
objec ves safeguards criteria
transition to a low-carbon, resilient, objec ve in the policy arena as well top priorities of
resource-efficient, and sustainable sustainable real estate credit investors –
economy. The EU Taxonomy sets The EU Taxonomy addresses climate and locally, regionally and internationally.
performance thresholds ('Technical environmental priorities while serving a
Screening Criteria') for economic activities critical role facilitating large-scale capital
which make substantial contribution to deployment toward environmentally Residential real estate credit originators,
one of six environmental objectives, sustainable activities and enabling investors, guarantors and counterparties
including: implementation of the EU Green Deal¹⁶. are becoming increasingly mindful of
decarbonization across the building sector
• Climate Change Mitigation; The common language of what is and the positive impact it has on property-
sustainable will address such policy level financial performance, as well as
• Climate Change Adaptation;
measures including the EU Action Plan on portfolio-wide risk reduction across first-
• Sustainable Use and Protection Financing Sustainable Growth¹⁷ while the order and second-order financial and
of Water and Marine Resources; clear definition of sustainable projects will environmental risks²¹.
• Transition to a Circular Economy; accelerate capital flows as institutional
investors have long sought widely
• Pollution Prevention and
recognized and reliable definitions as well As the transition towards environmentally
Control; and
as standardized environmental sustainable activities develops resilience
• Protection and Restoration of performance benchmarks¹⁸ for sustainable against climate and environmental shocks
Biodiversity and Ecosystems real estate. such a shift will also mitigate systemic risk
The EU Taxonomy and EU Green Deal have in the financial sector through facilitating
positive implications for Green Homes dynamic understanding of
Such economic activities must Do No macroeconomic transmission channels of
Significant Harm ('DNSH') to the other five, Solutions Providers, Investor/Developers
and Financial Institutions in the environmental risk and the integration of
where relevant, while also meeting environmental risk analysis into financial
minimum safeguards (e.g. OECD sustainable real estate arena which
encompass the Sustainable Europe decision-making.
guidelines on Multinational Enterprises
and UN Guiding Principles on Business and Investment Plan¹⁹, Renewed Strategy on
Human Rights). A summary of the steps Sustainable Finance and Large-Scale
that economic activity must go through to Renovation of Existing Buildings²⁰.
be considered EU Taxonomy-aligned are
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