Australia’s housing stock, which is worth over $10 trillion, is undergoing a green transformation as the big banks take on the challenge of reducing emissions and improving energy efficiency. The banking sector, which accounts for about 11% of Australia’s greenhouse gas emissions, has a key role to play in driving the transition to a net-zero economy by 2050.
Banks offer incentives for green homes
One of the ways that banks are supporting the greening of the housing sector is by offering incentives for customers who buy or build green homes. For example, Commonwealth Bank of Australia (CBA) has launched a Green Mortgage initiative, which provides a cashback of up to $2,000 for eligible customers who purchase a home with a NatHERS rating of 7 stars or higher. NatHERS is a national rating system that measures the thermal performance of homes.
Similarly, National Australia Bank (NAB) has introduced a Green Home Loan, which offers a discount of 0.25% on the interest rate for customers who buy or build a home with a minimum 7-star NatHERS rating. NAB also provides a $2,000 cash bonus for customers who refinance their existing home loan to NAB and meet the green criteria.
These incentives are designed to encourage customers to choose more energy-efficient homes, which can lower their energy bills and carbon footprint. According to CBA, a 7-star NatHERS rated home can save up to $600 per year on energy costs compared to the average existing home1. Moreover, green homes can also increase the value and resale potential of properties, as more buyers are looking for sustainable features.
Banks invest in green building standards and technologies
Another way that banks are contributing to the greening of the housing sector is by investing in green building standards and technologies. For instance, Westpac has partnered with the Green Building Council of Australia (GBCA) to develop a new standard for residential buildings, called Green Star Homes. This standard aims to set a benchmark for quality, comfort and sustainability in the housing market.
Westpac has also committed to providing $3.5 billion in lending and investment for climate change solutions by 2023, including renewable energy, green buildings and low-emission transport. Additionally, Westpac has set a target to achieve net-zero emissions across its operations and lending portfolio by 2050.
Likewise, ANZ has pledged to fund and facilitate at least $50 billion by 2025 for sustainable solutions, such as renewable energy, green buildings and low-carbon transport. ANZ has also set a goal to achieve net-zero emissions across its operations and business lending by 2050.
By investing in green building standards and technologies, banks are not only supporting the development of more sustainable homes, but also creating new opportunities for innovation and growth in the housing sector.
Banks collaborate with stakeholders to drive change
A third way that banks are leading the way in greening the housing sector is by collaborating with various stakeholders to drive change. For example, CBA has joined forces with the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA) to establish a $300 million fund that will provide loans for green home improvements. The fund will target existing homes that have a NatHERS rating of 3 stars or lower, and help them upgrade their energy efficiency through measures such as solar panels, batteries, insulation and heat pumps.
Similarly, NAB has teamed up with the CEFC and the International Finance Corporation (IFC) to launch a $2 billion fund that will provide loans for green residential projects. The fund will focus on supporting developers who build new homes that meet high environmental standards, such as 7-star NatHERS rating or Green Star certification.
By collaborating with stakeholders such as government agencies, international organisations and industry bodies, banks are able to leverage their expertise and resources to accelerate the transition to a greener housing sector.
