Berlin Hyp, a pioneer in the green bond market, has taken another step towards integrating sustainability criteria into real estate financing and investment products.
The German real estate bank yesterday published its Sustainable Finance Framework, that creates an overarching approach to classifying sustainable financing products using eligibility criteria. These in turn form the basis for sustainable capital market products, which will be issued at a later date.
“Our goal is to successively increase the share of taxonomy-compliant financing in our Green Loans portfolio,” said Teresa Dreo-Tempsch, chief market officer, Berlin Hyp. “We plan to only issue taxonomy-compliant Green Loans in our green business activities by the end of 2026. Transforming existing building stock is one of the biggest challenges of the coming years. We see it as our mission to support our customers with suitable products.”
For many years Berlin Hyp has been focusing on financing energy-efficient and environmentally friendly buildings. The adoption of the Delegate Regulation on the EU taxonomy means that sustainable, responsible action and business are now also reflected in regulatory developments again.
The taxonomy is the first EU-wide unified framework for sustainable and environmentally friendly activities and investments to be developed. It comprises six environmental targets to which appropriate economic activities can make a substantial contribution. As a sustainable real estate financier, Berlin Hyp will continue to make its contribution to fulfilling the environmental targets within the scope of the economic activity “construction and real estate”.
Berlin Hyp is now aligning its green loan portfolio, which currently includes the “energy efficiency loan” and the “taxonomy loan”, with its own sustainability objectives as well as the regulatory standards. These products each contribute to the Sustainable Development Goals SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). Each of the Green Loans can also be structured as transformation loans.
The energy efficiency loan is secured by energy-efficient and environmentally friendly buildings. The eligibility criteria for energy efficiency loans are defined in the Sustainable Finance Framework. The taxonomy loan is used to finance buildings or construction activities that fulfil the criteria outlined in the EU taxonomy for environmentally sustainable economic activities.
The transformation loan is used to finance measures to improve the energy and carbon footprint of buildings. In this case, the transformation of a building is supported for both products (taxonomy loans and energy efficiency loans). The primary focus of the transformation credit is to adapt a building according to the eligibility criteria for the taxonomy loan.
Berlin Hyp said it will review the Sustainable Finance Framework on a case-by-case basis, or at least once a year, and will adapt its strategic design accordingly.