More than 80% of respondents to the KPMG survey confirmed having an ESG strategy for financing commercial real estate, the company said. More than 90% of the surveyed banks signaled an increase or significant increase in ESG issues within their credit policies compared to the previous year.
The banks have made significant progress in the implementation of ESG criteria for their credit assessment, internal reporting, data collection and monitoring policies and other ESG-related activities. However, the survey reveals large differences between the different banks caused by the different strategies of their parent companies and how proactive central banks of different countries are.
Chawing legislation and growing market standards are prompting banks to adopt more restrictive ESG guidelines in their credit policies. Although the results of the survey show that 44% of banks did not refuse to provide financing to investors due to incompatibility with their internal ESG requirements over the past year, and 10% of the banks surveyed did not have certain assessment criteria in this respect, banks are increasingly focusing on sustainable development in their credit decisions.
The results of the KPMG survey suggest that compliance with ESG criteria was not a key, but more and more important factor in lending over the last 12 months. The company underlined that the number of banks that refused to finance investors due to non-compliance with their ESG requirements (only or in combination with other factors) has doubled over the past year.
“Interceptions with banks in the Central and Eastern Europe region clearly indicate an increasing importance attached to ESG aspects by financial institutions. More than 90% of the banks surveyed signaled an increase or significant increase in ESG issues under their credit policies compared to the previous year, while only a few did not notice any changes. On the other hand, in the face of the challenges related to the process of transformation of the real estate sector in terms of energy efficiency and decarbonization of buildings, there is still a gap in the financial products offered by banks in the region tailored to the expectations of financing the transformation of the sector. The scale of transformation will cover the vast majority of approx. 14.2 million buildings in Poland, more than half of which are non-residential buildings. This process will not be possible without the active involvement of the banking sector and the diversified offer of financial instruments for projects and initiatives related to ESG,” said the partner associate in the Department of Deal Advisory, Head of the Real Estate Advisory Group at KPMG in Poland, Monika Dębska-Pastakia.
The KPMG report titled. “Property Lending Barometer” was created on the basis of a study on financing commercial real estate by banks in the region of Central and Eastern Europe. This year, 48 banks from Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania, North Macedonia, Slovakia, Slovenia and Serbia participated in the survey.
Source: KPMG and ISBnews
