The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) and the Climate Bonds Initiative (CBI) have signed a Memorandum of Understanding to certify bonds that align with the European Union Taxonomy for sustainable activities. This collaboration aims to boost transparency and drive investment in energy-efficient finance, with an initial focus on key EU markets, including Germany, France, Ireland, and Hungary.
Through this partnership, EMF-ECBC and Climate Bonds will collaborate to establish and promote standards for covered bonds—debt securities secured by assets such as mortgages—ensuring alignment with the EU Taxonomy’s classification for environmentally sustainable economic activities. This alignment is designed to empower investors to make significant contributions to a low-carbon economy, positioning covered bonds as integral tools in the financial sector’s sustainability transformation.
The partnership’s primary objectives include developing best practices, encouraging market adoption, and raising awareness. The collaboration will create guidelines and standards to ensure that covered bonds meet EU Taxonomy requirements, thus enhancing transparency and credibility within the market. Additionally, it will support issuers by integrating sustainability criteria into their bond programs, broadening the range of sustainable investment options. A key focus is also on educating stakeholders about the benefits of aligning covered bonds with the EU’s sustainability objectives.
A central element of this initiative is the collaboration between EMF-ECBC’s Energy Efficient Mortgage Label (EEM Label) and the Climate Bonds Standard and Certification Scheme. The EEM Label, recognised for advancing energy-efficient mortgages, provides banks and investors with detailed data on loan portfolios, promoting due diligence and consumer confidence in green finance. This transparency de-risks bank portfolios, supports energy-efficient investments, and aligns with regulatory frameworks, such as the EU Taxonomy.
The Climate Bonds Certification Scheme, aligned with the Paris Climate Agreement, offers robust tools for assessing climate risks and asset resilience in the financial markets. This joint effort seeks to expand green bond market access, improve tracking of energy-efficient mortgage performance, and encourage investment in climate-aligned assets.
Sean Kidney, CEO of Climate Bonds, emphasised the importance of the initiative and said, “Today’s agreement marks a pivotal moment in our mission to foster sustainable finance practices. 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.”
Luca Bertalot, Secretary General of EMF-ECBC added, “By interlinking well-established quality labels in financial markets, the market is able to boost sustainable investments, enhance transparency, reduce greenwashing, and digitalise capital market solutions, thereby speeding up transaction execution and innovation, while boosting trust and confidence. It is in this spirit that the Climate Bonds Initiative and the Energy Efficient Mortgage Label are joining forces to scale up the flow of tangible financial resources to the climate transition.”