According to Environmental Finance, the European Covered Bond Council (ECBC) is currently working on market initiatives which will set minimum standards for Covered Bond issuances to be eligible for Energy Efficiency covered bonds. The standards are expected to be finalized in June and will cover residential and commercial mortgages for both new and retrofitted buildings. The standards will identify product by product mortgage by mortgage, green credentials and what is the component of energy efficiency in the mortgage. To recap, the ECBC introduces a Sustainable Covered Bond label.
Covered Bond labelled “Sustainable covered bond” is a covered bond that is fully compliant with the Covered bond label Convention and also includes a formal commitment by the issuer to use an amount equivalent to the proceeds of that same covered bond to refinance loans in clearly defined environmental, social or a combination of environmental and social (sustainable) criteria. Covered Bond Labelled sustainable covered bond programs are based on their issuer’s sustainable bond framework which has been verified by an independent external assessment. The issuer strives, on a best efforts basis, to replace eligible assets that have matured or are redeemed before the maturity of the bond by other eligible assets.