Specialist lenders can play a key role in the transition to a greener economy
Roxana Mohammadian-Molina is chief strategy officer at Blend Network
The next decade will be crucial for protecting the planet for future generations. Financial services, particularly specialist non-bank lenders, have a critical role to play by helping deploy the financing that is needed to power the urgent changes required.
Yann Murciano, CEO at Blend Network, says: “The sector as a whole needs to up its game to ensure it is not left behind. Lenders have a particularly acute responsibility to support sustainability by ensuring that they are able to magnify and amplify developer’s success and provide appropriate financial packages.”
In his address to the Global Investment Summit at COP26 last year, Prime Minister Boris Johnson announced nearly £10bn of private investment in green projects.
“The market is going green” he said, while predicting that one day we’ll be able to bring down the prices of green tech like heat pumps and solar panels.
From green and self-sufficient buildings, to harnessing solar energy, from vertical gardens and farms, to energy generation from waves, “green is good, green is right, green works” said Johnson, while also warning that urgent action was needed in order to mobilise the markets and bring in the private sector onboard.
While we are not short on examples of green technology and sustainable initiatives, the lending market is still lagging when it comes to providing debt to support such green initiatives, especially in the building and construction sector.
The reality is that self-sufficient buildings and regenerative developments often have a very specific set of requirements that need to be taken into consideration when seeking debt finance. This requires understanding of eco-friendly construction design, buildings designed to be operated independently from infrastructural support services such as electric power and gas grids, municipal water systems (self-sufficient buildings) or construction materials that minimize environmental impact.
Sadly, not many lenders are yet able to offer such understanding and products. So, while terms such as ‘ESG-compliant’ and ‘environmentally-friendly’ are now inundating many lenders’ daily vocabularies, the reality is that knowledge and understanding is still lagging.
At Blend Network, we have grasped the strategic importance and potential of this sector, and therefore have a dedicated lending team with extensive knowledge and experience in providing debt funding to sustainable building and regenerative development schemes.
From residential development schemes that regenerate wildlife habitat, to eco-dwellings that make use of sustainable construction materials which produce less CO2 during their manufacturing process, from housing schemes where flats and houses come with dedicated electric car-charging points, to housing schemes that come with extra cycle parking and encourage healthier lifestyles for its residents, our team regularly review and issue terms on environmentally-friendly schemes that are designed to prioritise sustainability, embrace regeneration and empower its residents to live a fulfilling healthy and sustainable lifestyle.
From a property developer’s perspective, environmental performance and ESG credentials can help them improve sales or attract better tenants who are increasingly seeking efficient, healthy, and green certified buildings to live and work in.
Incorporating ESG factors can lead to increased profitability through higher property values, attracting more/better tenants and improved returns on investment.
Aside from making decisions that are socially responsible or morally right, the growing trend of ESG integration across companies and investors makes the need to address sustainability within the construction industry increasingly more important.
In summary, the drive to create a green economy has accelerated, powered by a confluence of environmental and societal forces. In this context, the time is ripe for lenders to chip in and support the road to net zero. It is no longer enough to talk the talk, we must walk the walk.