100+ Financial institutions - $ 53 + Trillion in total assets

Financing towards net-zero buildings

Addressing the need to mobilize the financial industry to accelerate the transition of European buildings to net-zero

Buildings account for 36% of European greenhouse gas emissions. To meet the Paris Agreement and reach net-zero emissions by 2050, decarbonization measures in existing buildings need to increase drastically and be target-oriented. At the same time, new buildings need to lead the way towards zero emissions.

The Race to Zero has started. More and more financial institutions are setting net-zero targets. To go on this journey and track the improvements needed, financial institutions require clear guidance for acting as accelerator and leveraging public with private finance in the right direction.

About

PCAF’s latest project addresses the need to mobilize the financial industry to accelerate their actions to transition European buildings towards net-zero by 2050. It provides clear guidance to financial institutions to stay on the required course and to report on the positive impact of their actions in a transparent, robust and standardized way. The project targets the following objectives:

  • Mobilize financial institutions and make them accountable for taking actions

    • to finance the transition of European buildings towards net-zero

  • Enable financial institutions to measure and track progess towards net-zero

    • by harmonizing the measurement and target setting pathways for mortgage and real estate portfolios

  • Make the transition of the building stock towards net-zero actionable

    • by exploring technical and financial measures and developing best practice guidelines

Context

The transition to a net-zero economy by 2050 requires the transformation of all sectors. The building sector, in particular, requires massive investments in renovations and new buildings. Given the urgency of the matter, the European Commission's Renovation Wave seeks to at least double building renovation rates until 2030 as part of the Green Deal.

To act as an accelerator, financial institutions require clear guidance to prioritize and finance specific renovation approaches and new construction technologies to enable the needed long-term structural change of the European building stock.

PCAF provides a unique network of banks and investors in Europe as well as globally. This network collaborates to develop a transparent, harmonized standard for measuring financed emissions, an important step in steering towards net-zero.

Financial institutions need this information to plan and implement suitable and effective interventions in the form of innovative financial products and services that will help achieve a net-zero emission building stock at least cost and without detours.

Consequently, mobilizing the financial sector is key to accelerate the transition of the European building stock. As the financial sector mobilizes, it will incentivize building owners, real estate developers and the broader building sector to shift towards net-zero.

Governance

Core Project Team
The Core Project Team constitutes of a diversified set of representatives from the financial industry from across Europe working towards the net-zero building transition. The project team meets regularly to provide key expertise and to advance the project’s workstreams.

Expert Advisory Group
An Expert Advisory Group, comprising of key stakeholders from the building and financial sector, is regularly consolidated to deepen the understanding of the needs and challenges towards the net-zero building stock.

Building emission factor database

Financial institutions require robust approaches to accurately measure and track the progress of their European mortgage and real estate portfolios on the path towards net-zero. PCAF is developing an improved set of emission factors for the European building stock which will be made publicly available through a building emission factor database by the end of 2021.  

Knowledge products

As part of this project, PCAF prepares knowledge products and materials for financial institutions, such as best practice examples of financial products and services for building renovation and new constructions to encourage the mobilization of capital for the transition of European buildings to net-zero.