Opinions
24.02.2022

Climate-friendly mortgages?

If Switzerland is to achieve its climate goals, buildings must also play a part. Efforts to replace fossil-fuel heating and improve insulation need to speed up significantly. Banks can help, but politicians must provide the right framework. Building owners are ultimately responsible for making the decisions.
Article byOliver Buschan

To achieve its climate goals, Switzerland needs to reduce its CO2 emissions drastically and quickly, but there is still no adequate framework for doing so at present. With regards to buildings, which generate up to a third of all greenhouse gas emissions, the upgrade rate needs to double or, better still, triple as soon as possible. Creating incentives in this respect is a matter of urgency. Without them, customers are unlikely to replace old fossil-fuel heating systems or improve their buildings’ poor insulation in a timely manner.

Politicians routinely call on banks to promote greater climate efficiency in their mortgage lending. In fact, many banks are already doing just that, offering special products and advice geared to eco-friendly upgrades and newbuilds. However, in order to really master the challenges, all stakeholders must be actively involved. First and foremost, politicians need to provide the right framework. Ultimately, banks do not decide what their customers are allowed to do with their money and what not; nevertheless, banks can support their customers in their decision-making on how to improve climate efficiency of their homes.

What exactly must be done? There are lots of ways in which politicians can take action. They can cut down on bureaucracy and step up digitalisation to make it easier for customers to upgrade buildings. They can also create greater financial incentives. Moreover, they can review the conditions under which lenders operate with a view to promoting climate-efficient properties.

These are just three examples of the many areas in which concerted, consistent action is needed. Some cantons are already making good progress, but measures at the federal level are both possible and necessary. Further aspects are important for banks that grant mortgages and finance building upgrades. For example, data resources must be created to measure CO2 reductions and assign energy efficiency ratings to buildings. Banks can offer their customers valuable support when it comes to making their building more energy efficient, and customer consultations have a vital role to play here. However, customers will only become enthusiastic about improving energy efficiency when the right framework and incentives are in place.

Banks are prepared to explain the key aspects to their customers to help them make an informed decision. We are also committed to working with all other stakeholders to create the best possible framework, especially to improve the data situation and the use of digital technology as well as to ensure that capital can be invested where it will bring the greatest benefits in terms of achieving climate goals.

Sustainable finance

Authors

Oliver Buschan
Head of Retail Banking & Capital Markets
+41 58 330 62 25