HSBC issued the first green mortgages in the UAE

HSBC has issued the first green mortgages in the UAE, joining a growing number of lenders around the world who are providing renewable financing products to meet their Paris Agreement environmental, social, and corporate governance obligations.

The bank said in a statement on Sunday that it had authorised three mortgages for customers buying homes in Dubai's Sustainable City community. According to the bank, green home loans will be eligible for properties around the UAE that follow sustainability requirements.

The green home loans deliver a 0.25 percent interest rate cut and a 50% reduction in bank transaction fees for assets that follow certain environmental requirements, according to the lender.

According to a recent study by global consultancy KPMG, lenders around the world are increasingly providing green finance products to consumers, especially younger generations, who are selecting their bank based on their ESG qualifications.

“Sustainable development is more important now than it’s ever been and it’s vital that banks support customers with competitively priced green finance and encourage more sustainable behaviours,” Daniel Robinson, head of wealth and personal banking at HSBC UAE, said.

The energy used to cool, heat, and supply electricity to homes and workplaces accounts for more than 39% of all global carbon emissions, according to data from the World Green Building Council.

According to CBRE's Green Mortgages Post-Covid research, green lending models enable banks to relate a property's energy rating to the interest rate charged by borrowers. Home owners who want a green mortgage not only contribute to a more prosperous future, but they still stand to save money, according to the report.

“Issuing the UAE’s first-ever green mortgages is a significant moment for the country’s housing and financial markets, and demonstrates the appeal of green retail finance to customers looking to make more sustainable decisions while appreciating the financial upside,” Mr Robinson added.

Green mortgages from HSBC are available for properties that are LEED-certified or follow equivalent criteria, according to the lender.

LEED (Leadership in Energy and Environmental Design) is a globally recognized green building certification system that provides third-party confirmation that a structure was planned and constructed using environmentally friendly methods. The US Green Building Council created it.

“This is to benefit buyers of properties that are LEED-certified for the platinum or gold level and offers discounts and incentives for these loans,” Arran Summerhill, company director at Holo Mortgage Consultants in Dubai, said.

“Sustainable City and Falcon City of Wonders would fall into this category. The developments are scarce at the moment, but it is a great initiative to reward people who are looking to buy in these areas.”

According to the statement, HSBC also provides other renewable finance products in the UAE, such as green car loans and sustainable investment fund options.

In comparison to the previous year, HSBC saw a six-fold rise in sustainable and transition finance activity in the region in 2020.

HSBC announced that it would match funded emissions from its consumer portfolio to the Paris Agreement target of net zero emissions by 2050 or earlier.

By 2030, the lender plans to offer between $750 billion and $1 trillion in renewable financing and investment to help clients transition to more environmentally friendly corporate practices. By 2030, the bank wants to be net-zero in its own operations.

“We are proud to be the first development in the region to have our residents benefit from the issuance of HSBC’s green mortgage,” Faris Saeed, chairman of Diamond Developers, developer of The Sustainable City, said.

“With a commitment towards achieving net-zero carbon living, we have worked hard to set high standards of sustainability across all our communities.”