• This field is for validation purposes and should be left unchanged.

Banks

  • EDGE certificates can be provided directly to Banks' buyers as proof of delivery on the developer’s promise to build green.

Banks now offer preferred financing rates for property developers and green mortgages for home buyers with EDGE-certified buildings.

Property developers are beginning to benefit from incentivized financing offered by forward-thinking banks who are encouraging the construction sector to design better performing buildings. These banks offer incentivized financing to developers for projects that are certified green at the design stage with EDGE and other leading certification systems. In turn, banks benefit from owning a portfolio of green assets with greater value and less risk.

Qualified home buyers can then purchase EDGE-certified properties with green mortgages, where home improvement costs are folded into larger loans. Green mortgages are a win-win, as banks book lower risk loans, while buyers enjoy increased purchase power to pay for features that lower utility bills. As more banks join the trend, developers and buyers can take advantage of increasingly competitive offers, creating a new era where conventionally-built homes become obsolete.

Case Study: Bancolombia pivots the Colombian residential market towards a more sustainable future by rewarding green development.

Bancolombia, which is Colombia’s largest commercial bank, provides a construction financing rate of up to 1 percent less than market rates for projects certified with EDGE or other leading certification systems. The more measurably green the project is, the better the rate that is given to developers. At the same time, Bancolombia offers green mortgages to qualifying home buyers who purchase EDGE-certified properties at a discounted rate of 65 basis points for the first seven years of the loan. To do this, the bank uses its own resources alongside the proceeds of a pair of green bonds.

Qualifying projects must receive a preliminary design certificate from a rating system such as EDGE, with certification services provided by CAMACOL. Dozens of projects have been brought forward by developers eager to secure the discounted rate from Bancolombia. Davivienda, another leading bank in Colombia that has issued a green bond, now offers discounted financing as well, in addition to paying for a portion of EDGE certification fees. For more information, read the “coffee chat” with Franco Piza, Bancolombia’s Corporate Director of Sustainability, in IFC’s Green Bond Impact Report (2018).

EDGE satisfies a gap in the market for a metrics-driven solution supported by the investment community, that helps to accelerate green buildings through green bonds.

Investors want to be confident that a green building will deliver operationally. EDGE certification meets this need with its minimum standard of 20 percent less energy, water and embodied energy in materials, as calculated through the EDGE software and verified by third-party certifiers. Financial institutions are responding by adopting EDGE as eligibility criteria for their construction pipelines, including Bancolombia, CDC, Davivienda, EBRD, FMO, IDB, KfW and Proparco. EDGE continues to be intrinsic to IFC’s own business, with nearly $4 billion in direct investment and mobilization in green buildings within the past five years.

With green bond issuance growing in leaps and bounds – the number is expected to reach $210 billion by the end of 2018, according to the Climate Bonds Initiative – a measurable solution is essential to qualify green buildings. Green bonds have typically supported renewable energy projects, but with EDGE, now green buildings can better capitalize on the investment trend.

“Our financial services are linked to a positive transformation of society,” says Franco Piza, the Corporate Director of Sustainability for Bancolombia, which recently won the title of “the most sustainable bank in the world” by the Dow Jones Sustainability Index. “It’s our responsibility to offer products and services to reach new markets, lower risk and improve rates. The first order of business is profits for our clients through better assets, the second is protecting the environment.”