Green finance knowledge can accelerate progress toward decarbonization goals

The resource shares detailed insights from five international sustainability organizations.

Feature image: The LEED Gold West Tampa Branch in Florida. Photo credit: BayFirst National Bank.

At Climate Action Week in London in late June, USGBC and other organizations released the joint report Financing Transformation: A Guide to Green Building for Green Bonds and Green Loans. The report discusses in detail how various building verification and certification standards can ensure compliance with global classifications and bond frameworks, so that our worldwide energy transition goals can be met.

In addition to USGBC, four other organizations, including the UK-based Building Research Establishment (BRE), the Green Building Council of Australia (GBCA), the Singapore Green Building Council (SGBC) and Alliance HQE-GBC France collaborated on the report. These institutions administer some of the most influential green building rating systems in the world: BREEAM (BRE), Green Star (GBCA), Green Mark (Singapore's Building and Construction Authority and SGBC), HQE (Alliance HQE) and LEED (USGBC).

Breaking down green finance

Green finance as a concept includes instruments such as green loans and green bonds, the use of which is increasing as companies committed to reaching decarbonization goals seek access to the necessary funding. These tools are essential for moving us toward a low-carbon economy, as they provide financial incentives for sustainable practices.

According to the report, however, it's vital at present to increase awareness and understanding of how the real estate sector can access sustainable finance, to allow us to make progress at a more rapid pace.

The goal of the guide, through breakdowns of the criteria and methodologies behind major building certification systems, is to show how such certifications align with the goals of sustainable finance. It describes their role in enhancing transparency, accountability and environmental performance so that institutional investors, financial institutions, owners and developers can better understand how to effectively specify the use of green building certifications in financial instruments.

Graphic: Financing Transformation: A Guide to Green Building for Green Bonds and Green Loans.

The details of relevant opportunities

The report goes on to highlight financial information that clarifies the opportunity green buildings provide to the market. Discussing bonds, loans and the use of proceeds, as well as comparing multiple taxonomies, these sections provide significant, in-depth detail for decision-makers.

Definitions of terms used in the green building industry, such as "emission scopes" or "market-based accounting," help illustrate how to use decarbonization tools and rating system tools together.

Sample targets and model language that can be used to access sustainable finance for use of proceeds is also included in the guide, in addition to case studies of specific projects.

By boosting understanding of sustainable finance, the report's authors say, they hope to "inspire a collective effort towards a sustainable future, where the built environment plays a pivotal role in addressing climate change and promoting environmental stewardship. By leveraging sustainable finance, we can unlock the full potential of green buildings, driving innovation and progress in the real estate sector while contributing to global sustainability targets."

Explore the guide to learn more about how green finance tools and green building rating systems can empower investors to help us reach our global climate goals and human health outcomes.

Read the full guide

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