Green Finance Institute issues standards for home retrofit funding
The Green Finance Institute, an independent Treasury-supported organisation which advises on sources of finance for green projects, has published a set of principles to “strengthen the integrity of the retrofit finance market”. The Green Home Retrofit Finance Principles (GHRFPs), announced on September 28th, aim to apply standards for the financing of green building updates.
The latest release follows two reports issued earlier in the year by the Green Finance Institute. In May, they advocated ramping up the pace and scale of investment into the efficiency and resilience of residential buildings. In September, the Institute launched a task force to identify opportunities and barriers to financing sustainable projects.
Becoming an influential voice in the green economy, the Institute has partnered with some leading finance institutions – Lloyds, NatWest, BNP Paribas, Legal & General, Coutts, Santander and others – as well as energy companies, government agencies and local authorities. The partners have enthusiastically endorsed the newly-issued principles.
Defining green home retrofit financing as funding the “retrofitting of domestic buildings…to achieve verifiable improvements in energy efficiency, carbon emissions or climate resilience” in alignment with their May advice, four core components are identified:
Use of Proceeds;
Process for Project Evaluation and Selection;
Management of Proceeds;
Accountability and credibility lie at the core of the principles so, at a stroke, the Green Finance Institute has enhanced the appeal of financing retrofit projects to banks and other financial institutions. Timing the announcement to coincide with the launch of the government’s Green Home Grants scheme, the principles should reassure lenders and participants as to the credibility and accountability of funds and projects.
In a separate development in early October, the Green Finance Institute – in association with Impact Investing Institute and the London School of Economics – has called on the government to issue a green sovereign bond to finance their green recovery plans.
Again, the Institute uses the backing of their partners who represent organisations with assets and assets under management of more than £10 trillion to support their proposal to the government. The proposal states that the sovereign bond would underpin economic recovery, catalyse green and sustainable finance and show the UK as a market leader in green and sustainable capital markets.
It follows the government’s announcement of a ten-point plan to be unveiled before the end of the year to "build back greener" and effect a green recovery.