The Green Finance Institute (GFI) and the Climate Bonds Initiative (CBI) have teamed up to launch the Global Property Linked Finance Initiative to drive global markets.
The initiative aims to turn property linked finance (PLF) into a new global asset class to unlock money to fund the decarbonisation of buildings.
PLF links repayments to a property rather than its owner to enable long-term affordable finance to renovate buildings, resolving the barriers of high upfront costs and long payback periods.
The organisations said the success of this had already been proven in the United States, where more than $18bn (£13bn) has been provided through Property Assessed Clean Energy (PACE) programmes. They said PLF provided a secure, low-risk investment opportunity for capital markets while overcoming the obstacles to retrofit at scale.
PLF exists in Canada and Australia, and emerging pilots are taking place in the UK and Spain.
However, the GFI and CBI said PLF was being developed in siloes, leading to a lack of shared standards. The initiative aims to unify the global markets and speed up deployment timelines.
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The initiative will deliver technical support to develop PLF solutions and offer financial tools to help early adopters to scale.
The organisation said $34trn (£25.2trn) needed to be invested into the global building stock by 2050 to meet net-zero and resilience goals.
Emma Harvey-Smith, managing director at the GFI and co-chair of the GPLFI, said: “Property linked finance has already demonstrated its ability to unlock billions in sustainable investment in several different markets.
“Through the Global Property Linked Finance Initiative, we are working with partners across the world to lay the foundations for a new global asset class, creating the frameworks, technical assistance and finance vehicles needed to unify fragmented markets and accelerate capital flows into net-zero and climate-resilient buildings everywhere.”
Ina Hoxha, chief investment officer and deputy CEO at CBI, added: “Property linked finance has the potential to transform how we fund the decarbonisation and resilience of the building sector globally.
“By harmonising standards and scaling this proven mechanism internationally, the Global Property Linked Finance Initiative will unlock much-needed capital flows, accelerate market development, and provide investors with a new, credible asset class to support the net-zero transition.”
The initiative was launched at an event hosted in New York today and will be delivered in three phases:
- PLF Principles and Pathways: Through a global advisory group, the GPLFI is developing the tools for countries to understand PLF and demonstrate practical pathways to launch markets.
- PLF Political Momentum: Building ministerial-level support to align national markets with PLF frameworks and commit to developing national PLF markets at COP31.
- PLF Accelerator and Capital Markets Vehicles: Providing tailored technical assistance and capital markets tools to scale PLF in both mature and nascent markets.
Last year, the GFI published a ‘greenprint’ to promote the use of PLF in the UK, demonstrating how it could unlock £52-70bn in private investment to retrofit housing stock.