The EBA proposes a voluntary EU green loan label to help spur markets

EBA has issued an opinion and a report in response to the EC’s call for advice on green loans and mortgages. In this response, the EBA proposes the introduction of a voluntary EU label for green loans, aiming to stimulate the market and contribute to the EU’s sustainability objectives. The proposed label would be based on a common EU definition and integrated into the Mortgage Credit Directive, encompassing the concept of green mortgages and their key sustainability features.
The EBA’s analysis indicates that green lending currently constitutes a limited share of the overall lending in the banking sector. Specifically, loans for energy-efficient building renovations and SMEs are not at levels sufficient to meet the EU’s sustainability goals. To address this, the EBA suggests that the EC should provide a voluntary EU definition and label for green loans, leveraging existing market practices and industry standards aligned with environmental objectives.
Key proposals from the EBA include incorporating flexibility into the EU definition and labeling framework for green loans, allowing market participants to make credible contributions to environmental objectives. The labeling framework should provide transparent information for prospective borrowers, including details on the long-term benefits of investing in energy-efficient solutions, documentation requirements, and the availability of financial support schemes.
In addition to recommending the integration of green mortgages into the Mortgage Credit Directive, the EBA emphasizes the importance of considering the energy performance of buildings, the use of energy performance certificates, and enhancing competence and knowledge related to green mortgages in the directive’s review.
The EBA’s response is based on input received from 83 credit institutions across 27 EEA countries, gathered through an industry survey (eventid=19721).