In order that credit institutions can continue to check their taxonomy compliance clearly and transparently when financing existing buildings and analyzing their real estate loan portfolios, the Association of German Pfandbrief Banks (vdp) and consulting firm Drees & Sommer have updated the Top 15 Percent benchmarking that has become established on the market. Additional ratios for energy and carbon emissions have been added. The benchmarking now takes into account current regulatory requirements such as the recently updated German Building Energy Act (Gebäudeenergiegesetz – GEG).
Since April 2022, the vdp and Drees & Sommer have been using the benchmarking to support financial market participants and the real estate industry in demonstrating compliance for the economic activity ‘acquisition and ownership of buildings’, as referred to in the taxonomy. Specifically, this involves deriving benchmarks for compliance with the Top 15 percent threshold for properties (residential and nonresidential buildings) in Germany. A building is considered taxonomy-compliant if, among other factors, it is in the top 15 percent of the national or regional building stock with regard to primary energy demand.
“We have received a large amount of feedback and a consistently positive response to our benchmarking from the market. For credit institutions, it makes work in the real estate financing business much easier. The extensive update ensures that the benchmarking can continue to be used effectively. Reaching the Top 15 percent threshold is an important component in an analysis of taxonomy compliance. For this purpose, we provide guidance and create transparency through clear and easy-to-follow criteria,“ explains Sascha Kullig, Member of the vdp Management Board.
Pursuant to the EU Taxonomy Regulation, the acquisition or ownership of a building licensed before December 31, 2020, makes a substantial contribution to achieving the objective of climate change mitigation if, among other factors, one of the following two technical conditions are met: the building has at least an energy performance certificate (EPC) class A or the building is within the top 15 percent of the national or regional building stock expressed as operational primary energy demand (PED) and demonstrated by adequate evidence. A distinction is made between residential and nonresidential buildings.
“Over a period of less than three months, we worked intensively on comparing the benchmarking with current regulatory requirements. Based on this, we developed an update on those criteria that must necessarily be met for buildings to be in the top 15 percent of their property class. In this way, we can transparently provide evidence that buildings make a substantial contribution to achieving the objective of climate change mitigation. To improve comparability, we also added more detailed energy performance figures and data on carbon emissions,” said Claudio Tschätsch, who is responsible for ESG and Sustainable Finance issues at Drees & Sommer.
The study has been exclusively carried out for the vdp and its member institutes. Information is based on publicly accessible, representative sources. For further details (in German language), please visit the vdp website at: https://atvdp.de/ax