Are green covered bond impact reports reliable?

Main Article Content

Zsolt Mihálovits
Éva Paulik

Abstract

This study aims to provide an overview of the current impact assessment methodologies of green covered bonds using residential and commercial real estate collateral based on a few recent examples in Germany, Poland and Hungary. The study recalls the various impact recommendations and provides insight into what is currently included in impact assessments. It also reviews the methodology and some data sources used by impact assessment providers. Green-covered bonds are still a very young asset class but as it has grown, so has investor interest in impact reporting to inform decision-making processes, analysis and investor reporting. At the same time, impact reports still show significant variability and very different levels of transparency. In addition, this paper highlights some of the missing links and data in the environmental impact assessment of real estate-backed bonds in general.

Article Details

How to Cite
Mihálovits, Z., & Paulik, Éva. (2022). Are green covered bond impact reports reliable?. Cognitive Sustainability, 1(3). https://doi.org/10.55343/cogsust.30
Section
Articles
Author Biographies

Zsolt Mihálovits, The Central Bank of Hungary

Principle Risk analyst, DIRECTORATE  MONETARY POLICY INSTRUMENTS, FOREIGN EXCHANGE RESERVES AND RISK MANAGEMENT, The Central Bank of Hungary

Éva Paulik

Risk Analyst, DIRECTORATE  MONETARY POLICY INSTRUMENTS, FOREIGN EXCHANGE RESERVES AND RISK MANAGEMENT, The Central Bank of Hungary

References

CBI (2017a). Green Covered Bonds: building green cover pools. URL: https://www.climatebonds.net/files/files/March17_CBI_Briefing_Covered_Bonds.pdf (Downloaded: 28 July 2022)

CBI (2017b). German Green Bonds – Update and opportunities. URL: https://www.climatebonds.net/files/files/Germany_GreenBondsReport_MAY2017.pdf (Downloaded: 3 Aug 2022)

CBI (2020). Buildings Criteria. URL: https://www.climatebonds.net/files/files/standards/Buildings/Low%20Carbon%20Building%20Criteria_V_1_1_July2020.pdf (Downloaded: 11 July 2022)

CBI (2021). Post-issuance reporting in the green bond market. URL: https://www.climatebonds.net/files/reports/cbi_post_issuance_2021_02g.pdf (Downloaded: 11 July 2022)

Cognitive Sustainability (2022). Cognitive Sustainability. DOI: https://doi.org/htfq (Downloaded: 14 September 2022)

DGNB (2020). Framework for carbon neutral buildings and sites. URL: https://www.dgnb.de/de/verein/publikationen/bestellung/downloads/DGNB-Framework-for-carbon-neutral-buildings-and-sites-2020.pdf (Downloaded: 14 July 2022)

Drees & Sommer (2020). Green Bond Methodology Report – mBank Hipoteczny S.A. 2020-04 – Claudio Tschätsch & Dipl.-Ing. Tobias Burkard, DGNB Auditor. URL: https://www.mhipoteczny.pl/download/relacje-inwestorskie/200716_methodology_report_mbankbh_pb0002.pdf (Downloaded 11 July 2022)

Drees & Sommer (2022a). PKO Bank Hipoteczny – Sustainability Consulting – Revised Green Bond Methodology – Claudio Tschätsch & Merlin Hüsing. URL: https://www.pkobh.pl/media_files/cfd75062-d64b-44aa-8e67-a569a79ce36e.pdf (Downloaded 11 July 2022)

Drees & Sommer (2022b). DZ HYP AG Green Bond Consulting – Portfolio Assessment & Impact Reporting 2022-02-02 – Claudio Tschätsch & Johannes Rößler. URL: https://dzhyp.de/fileadmin/user_upload/Dokumente/Investor_Relations/Green_Bond/DZHYP_Pre-Issuance_Reporting_2022.pdf (Downloaded: 18 July 2022)

Environmental Finance (2020). Green Buildings and Green Bonds. URL: https://www.environmental-finance.com/content/the-green-bond-hub/green-buildings-and-green-bonds.html (Downloaded: 1 Aug 2022)

European Commission (2010). Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings. URL: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32010L0031&from=HU

European Commission (2017). CoM Default Emission Factors for the Member States of the European Union. URL: https://data.jrc.ec.europa.eu/dataset/jrc-com-ef-comw-ef-2017 (Downloaded: 1 Aug 2022)

European Commission (2020). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – A Renovation Wave for Europe - greening our buildings, creating jobs, improving lives. URL: https://eur-lex.europa.eu/resource.html?uri=cellar:0638aa1d-0f02-11eb-bc07-01aa75ed71a1.0003.02/DOC_1&format=PDF (Downloaded: 3 Aug 2022)

ICMA (2019). The GBP Impact Reporting Working Group – Suggested Impact Reporting Metrics for Green Building Projects. URL: https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/Resource-Centre/Final-Green-Buildings-Reporting-Metrics-March-2019-including-Reporting-Templates-200319.pdf (Downloaded: 13 July 2022)

ICMA (2022). Handbook Harmonised Framework for Impact Reporting, June 2022. URL: https://www.icmagroup.org/assets/documents/Sustainable-finance/2022-updates/Harmonised-Framework-for-Impact-Reporting-Green-Bonds_June-2022v2-020822.pdf (Downloaded: 11 July 2022)

ISS ESG (2022). Second Party Opinion (SPO) – Sustainability Quality of the Issuer and Green Bond Framework, DZ HYP AG, 09 Feb-ruary 2022. URL: https://dzhyp.de/fileadmin/user_upload/Dokumente/Investor_Relations/Green_Bond/spo-20220209-dzhyp.pdf (Downloaded: 15 July 2022)

Manaugh, G. (2007). Without Walls: An Interview with Lebbeus Woods. URL: https://bldgblog.com/2007/10/without-walls-an-interview-with-lebbeus-woods/ (Downloaded: 14 September 2022)

MünchenerHyp (2021). Impact Reporting 2021. URL: https://www.muenchenerhyp.de/sites/default/files/downloads/2022-03/mhyp_Impact_Reporting_2021_en_final_17.3.pdf (Downloaded: 5 Aug 2022)

NFM (2015). Nemzeti Épületenergetikai Stratégia. URL: https://ec.europa.eu/energy/sites/ener/files/documents/EU%C3%81T_164_2_2105_Nemzeti%20%C3%89p%C3%BCletenergetikai%20Strat%C3%A9gia%20150225%20pdf.pdf (Downloaded: 5 Aug 2022)

NORD/LB (2021). NORD/LB Green Pfandbrief. URL: https://www.nordlb.com/fileadmin/redaktion/Nachhaltigkeit/GreenBanking/NORDLB_Green_Bonds_September_2021_EN.pdf (Downloaded: 11 July 2022)

NPSI (2020). Position Paper on Green Bonds Impact Reporting. URL: https://www.kuntarahoitus.fi/app/uploads/sites/2/2020/02/NPSI_Position_paper_2020_final.pdf (Downloaded: 11 July 2022)

OTP (2021). Zöld jelzáloglevél jelentés 2021. URL: https://www.otpbank.hu/OTP_JZB/file/JZB_Zold_jelzaloglevel_jelentes_2021.pdf (Downloaded: 8 Aug 2022)

Ritter, R. (2021). Van eszköz a magyarországi ingatlanok energetikai állapotának javítására. URL: https://www.mnb.hu/letoltes/21-03-02-ritter-renato-a-magyarorszagi-ingatlanallomany-energetikai-allapota.pdf (Downloaded: 1 Aug 2022)

Sustainabonds (2019). Vdp sets minimum standards for Green Pfandbriefe. URL: https://sustainabonds.com/vdp-sets-minimum-standards-for-green-pfandbriefe/ (Downloaded: 25 July 2022)

UniCredit 2021, Green Asset Portfolio Preliminary Estimation for the First Green Covered Bond Issuance of UniCredit Jelzalogbank – Viktor Juhasz, PhD. URL: https://www.jelzalogbank.hu/system/fileserver.html?file=/202110/GAPPE_for_the_FGCBI_of_UC_JZB.pdf&type=related (Downloaded: 27 July 2022)

Wuppertal Institute (2022). Impact Assessment Methodology – MünchenerHyp Green Portfolio. URL: https://wupperinst.org/fa/redaktion/downloads/projects/MHyp_Method_Paper_v1-5.pdf (Downloaded: 25 July 2022)

Most read articles by the same author(s)