Net carbon positivity in European green real estate finance
Maria Holopainen, Anniina Saari, Seppo JunnilaPurpose
Banks as key financiers of real estate play a pivotal role in funding green property investments with net-positive environmental impacts, including carbon storage and sequestration in buildings. Extant literature on green real estate finance centres around energy efficiency and green building certificates, remaining disconnected from climate policy studies calling for more drastic carbon removal actions. This study aims to bridge this gap by examining banks' readiness to adopt “net carbon positivity” requirements in green property lending.
Design/methodology/approach
This study adopts a qualitative content analysis research methodology to investigate how European banks address net carbon positivity in their green funding frameworks (GFFs) and whether banks' green property loan criteria could advance net-positive building performance. The data were collected from documents openly available on banks' websites.
Findings
The analysis of the GFFs of 33 leading European banks confirms that green property lending criteria are largely based on the EU Taxonomy, emphasising environmental harm reduction over net-positive outcomes. However, preliminary results suggest that green building frameworks could promote net carbon positivity by expanding current requirements to documented, long-lived biobased materials and site-level interventions, particularly in construction and climate change adaptation activities.
Practical implications
The findings indicate that current green finance frameworks can serve as transitional mechanisms towards “beyond net zero” goals.
Originality/value
To our knowledge, this is among the first studies to link the net carbon positivity potential with green real estate finance, particularly in relation to banks' lending criteria.