Key Impact Points:

• Accelerating Green Finance: The collaboration certifies bonds adhering to the EU Taxonomy, boosting transparency in sustainable investments.
• Supporting Climate Goals: Aligning covered bonds with sustainability standards helps drive investment toward the low-carbon economy.
• Enhancing Market Confidence: Joint efforts between Climate Bonds and EMF-ECBC promote trust by reducing greenwashing and increasing transparency.

The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) and the Climate Bonds Initiative (Climate Bonds) have joined forces to certify bonds aligned with the European Union (EU) Taxonomy for sustainable economic activities. This partnership, formalized through a Memorandum of Understanding, aims to foster transparency and investment in energy-efficient finance across key EU markets like Germany, France, Ireland, and Hungary.

New Standards for Sustainable Bonds

Together, EMF-ECBC and Climate Bonds will develop and promote standards that align covered bonds—debt securities backed by mortgages—with the EU Taxonomy. These bonds, crucial to financial markets, will now offer investors a clear path to supporting a low-carbon economy.

“Today’s agreement marks a pivotal moment in our mission to foster sustainable finance practices,” said Sean Kidney, Climate Bonds CEO. “By aligning covered bonds with the EU Taxonomy, we are not only supporting the transition to a low-carbon economy but also enhancing the attractiveness and credibility of these essential financial instruments.”

Key Objectives of the Partnership

• Developing Best Practices: Establishing stringent guidelines to ensure that covered bonds meet the EU Taxonomy’s standards, improving transparency and credibility in the green finance market.
• Promoting Market Adoption: Assisting issuers in integrating sustainability criteria, broadening investment opportunities.
• Raising Awareness: Educating key stakeholders on the advantages of sustainability-aligned covered bonds, including investors, financial institutions, and policymakers.

Related Article: PRI, UNEP FI, and Climate Bonds Initiative Collaborate to Support Global Sustainable Finance Taxonomies

Driving Transparency with Energy Efficiency

This collaboration leverages the EMF-ECBC’s Energy Efficient Mortgage Label (EEM Label) and Climate Bonds’ globally recognized Certification Scheme. The EEM Label provides reliable data on energy-efficient mortgages, boosting investor confidence and de-risking bank portfolios.

Luca Bertalot, EMF-ECBC Secretary General, noted, “By interlinking well-established quality labels in financial markets, we can boost sustainable investments, enhance transparency, reduce greenwashing, and digitalize capital markets, speeding up transactions and fostering innovation.”

By aligning with EU regulations, these efforts aim to scale up energy-efficiency investments and make them more accessible to global investors, furthering the transition toward a sustainable, climate-aligned financial system.

This strategic partnership is a critical step toward building a greener, more resilient financial market, enhancing both investor confidence and global efforts to combat climate change.