EEFIG work on risk assessment: - View from a member: Luca Bertalot, Secretary General, the European Mortgage Federation

Climate change risk analysis in the near future will drive radical changes in the prudential landscape for European banks and in market best practices. We are very glad to see the final results of the EEFIG analysis, which confirms the methodological approach of the Energy efficiency Data Protocol and Portal (E­eDaPP) analysis and produces additional, clear scientific evidence of the significant negative correlation between building energy performance and credit risk. Energy efficiency is an endogenous component of risk for assets in banks’ portfolios and improving the energy efficiency of the underlying collateral clearly acts as a significant risk mitigant. The prudential framework should take into consideration these important results and recalibrate the regulatory framework accordingly. 

“Banks urgently need to set ambitious and concrete goals and timelines — including measurable intermediate milestones — to mitigate their exposure to current and future C&E risk,” explained Frank Elderson, vice-chair of the ECB’s Supervisory Board.

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