Insights Blog

The European Commission has written to the European Banking Authority, enclosing a Call for Advice on Green Loans.

Key aspects of the Commission’s request are the following (with an emphasis on the retail and SME markets):

  • An overview of current market practices and the prevalence of green loans in the banking market.  This should include information on the market segments in which retail borrowers and SMEs are most active and where they might benefit from gaining access to green loans.  The Commission is particularly interested in the EBA’s views on the most common methods used to assess whether loans qualify as ‘green’, and the credibility of those methods.  EBA feedback is also being sought on potential gaps in the green loan market i.e. whether there is a lack of bank lending in certain key ‘green’ sectors, and any regulatory barriers to the development of the green loan market. 
  • Views on the merits of a voluntary EU definition of green loans, based on the EU Taxonomy.
  • Suggestions for measures (legislative and non-legislative) that could encourage the uptake of, or access to, green finance by retail and SME borrowers.  The Commission has suggested that any proposals by the EBA could include measures to enhance the comparability, reliability and transparency of green retail lending activities by credit institutions, with a consumer protection overlay.
  • An assessment of the merits of further specifying loan origination process requirements for credit institutions with the twin aims of stimulating the development of the green loan market, and safeguarding credibility and consumer protection.

The EBA has been asked to send its advice to the Commission by 29 December 2023

“The market for green retail loans and mortgages is developing, based on a range of market practices, and credit institutions are starting to apply and test the EU Taxonomy as a basis for originating retail green loans, including mortgages.”