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EU Commission Calls for Advice from EBA on Green Loans and Mortgages

On 22 November 2022, the European Commission issued a request for advice to the European Banking Authority (EBA) on the European green loan and mortgage market.

The request for advice encompasses various green loans from credit institutions in the EU. Among them are green mortgages, loans based on the EU Taxonomy and its six environmental objectives, and loans with environmental sustainability features.

With a focus on retail and small businesses, the following aspects are emphasized In the Commission's request:

  • An overview of existing market practices: On the basis of interactions with industry and the supervisory community, EBA is asked to provide an overview of the green loan market and existing market practices. This overview should highlight relevant green loan market segments, particularly those where small and medium-sized businesses could benefit from green loan access.
  • A detailed description of and comparison of the most commonly used methods for qualifying green loans should also be included in the overview, along with an assessment of their credibility in terms of market confidence and the environmental ambition of the green retail loans they generate. Potential market gaps (e.g., a lack of financing in renewable energy, energy efficiency, renovations, sustainable building materials, etc.) should also be addressed, along with regulatory barriers and other obstacles to the optimal development of a green retail loan market.
  • On the basis of the Taxonomy and its disclosure requirements, EBA should define green loans. Included should for example be key features and process requirements for originating such loans and assessing and monitoring their alignment with the Taxonomy criteria.
  • To encourage and facilitate the uptake of green loans by retail borrowers based on the Taxonomy and encourage the origination of such assets by credit institutions, EBA is asked to identify and assess potential legislative and non-legislative measures. Such measures might address ways to enhance the comparability, reliability, and transparency of green retail loan activities by credit institutions.
  • EBA should analyses additional requirements for the green loan origination process in order to:            
    • Promote the development of green loan markets and their origination, as well as
    • to safeguard the credibility and consumer protection in the green retail loan market while ensuring usability and proportionality.

As a next step, the EU Commission has requested EBA to provide its advice by 29 December 2023.

For inquiries please contact:

RBI Regulatory Advisory

Raiffeisen Bank International AG | Member of RBI Group | Am Stadtpark 9, 1030 Vienna, Austria  | Tel: +43 1 71707 - 5923