The multiple benefits of energy efficiency investments such as improved indoor air quality, job-creation, energy poverty alleviation, and environmental sustainability are increasingly considered by policymakers. However, these benefits are not yet fully part of the financing and investment decision making routines of asset owners and financial institutions.
Properly analysing the potential of these co-benefits can significantly increase the attractiveness of energy efficiency measures and boost their deployment.
In this context the working group explored two main focus areas:
- Methodologies to monetise the multiple benefits and to integrate them in investment decision-making and financing procedures.
- Decision-making processes related to energy efficiency investments and how multiple benefits can play a role in increasing the uptake of energy efficiency measures.
Timeline of WG activities
- February 17, 20201st WGM, Introduction of the general concept
- July 8, 20202nd WGM, Macro-economic effects of multiple benefits in the context of the COVID recovery
- September 10, 20203rd WGM, Multiple benefits in the context of social housing
- November 20, 20204th WGM, Multiple benefits in the context of social housing (continued)
- December 8, 20205th WGM, EU Taxonomy, green building certification schemes and multiple benefits
- March 23, 20216th WGM, Multiple benefits in the context of managing and supervising of ESG risks for credit institutions and investment firms
- April 28, 20217th WGM, Multiple benefits of energy efficiency in the context of impact investing
- May 31, 20218th WGM, Discussion of Policy recommendations
The main output from the working groups covers the three most relevant thematic areas identified in relation to the non-energy benefits associated with energy efficiency investments: health and social benefits, the Sustainable Finance Taxonomy and green building rating tools and impact investing. Additionally, the consortium developed a quantification and monetisation tool for commercial real estate.
Lessons learned from the working group meetings are:
Multiple benefits are not yet top of mind for stakeholders working in financial institutions (FI’s).
It is important to emphasise the benefits for the company and show how they can improve quality of work beyond energy efficiency.
Multiple benefits are diverse, and it is important to clarify who receives the benefits (e.g. building owners, immediate neighbourhood).
The focus on non-energy benefits and reduced energy poverty can help stimulate demand for a range of programmes such as social building renovation efforts.
Mainstreaming the approach to multiple benefits, through e.g. taxonomy, can lead to benchmarks for monetising these benefits and make them operable for investors.
Key recommendations from these are:
The built environment has a large influence and impact on people and the environment. It is key to recognise and deliver added value through energy efficiency (EE) investments.
Many Financial Institutions and building sector stakeholders understand the value of energy efficient buildings but struggle to account for the multiple benefits.
Multiple benefits remain difficult to communicate, report, track and monetise due to lack of common definitions, benchmarks, widely accepted KPIs and lack of reliable data.
Targeting Taxonomy compliance via energy efficiency investments can also generate wider benefits which are currently outside the scope of the screening criteria.
Disclosure and reporting initiatives are instrumental to identifying non-energy impacts, improving data collection and disclosure practices.
The impact investment framework can provide useful pointers on how non-energy benefits could be valued. While this identification and evaluation strengthens the connection between EE- and impact investing, it can also increase their attractiveness to impact investors.
WG External Communications
Report on Multiple benefits of energy efficiency investments for financial institutions
Prof. Dr. Clemens Rohde
Clemens is head of the Energy Efficiency business unit in the Competence Center Energy Technologies and Energy Systems at Fraunhofer Institute for Systems and Innovation Research ISI since 2012. His areas of research include the development and evaluation of instruments for improving energy efficiency in different sectors as well as the assessment and analysis of energy efficiency measures in these sectors.
Oliver has over 20 years’ experience in energy policy and sustainable business consultation. He is currently the Executive Director at Buildings Performance Institute Europe.