How to reach the decarbonisation target of your mortgage portfolio

Many banks have adopted ambitious decarbonisation targets for their lending portfolios by 2030. A major component of these targets is to reduce the financed emissions (kgCO2e/m2) of their mortgage portfolio, for example:

  • Danske Bank -55% against a 2020 baseline
  • Nordea at least -40% against a 2019 baseline
  • Swedbank -39% against a 2019 baseline
  • SEB -30% against a 2020 baseline

This means that over a period of less than 8 years, energy performance of a vast number of residential buildings need to be significantly improved. But which ones, by how much, and in what way is hard to determine. Baselines have been estimated using standard values and methods rather than actual data.

Understanding the baseline

We have collected bottom up energy performance and consumption data of tens of thousands of Swedish single family houses to analyze what renovation activities homeowners can do to reduce their net energy demand. From these we selected a national representative sample of 1.000 buildings and used it as a baseline to calculate CO2e emissions based on actual consumption data. Then we set a fictitious target to reduce net emissions by 40% by 2030 against that baseline.

Assessing the improvement potential of your portfolio

Based on this data we’ve run different scenarios to model and assess what it would take to achieve the 40% net emissions reduction target. We’ve then chosen one scenario to do further analysis on. For this scenario we assume that households would choose the type of installations that is most viable for them economically, and secondly that they would strive to keep their investment as low as possible - meaning that most would prefer to limit the project size and number of installations.

We found out that if each household considered the activity with the highest net-energy reduction potential for them (i.e. only one activity per household), net carbon emissions could be reduced by as much as 36%.

Net tCO2e emissions per 1000 properties

Translating targets into concrete actions

Data is key in making informed decisions, and to successfully and in a data-driven way drive green transition that data needs to be translated into concrete actions. If we continue with the scenario that would reduce CO2e emissions by 36%. Then, those numbers translates into these concrete actions: 529 solar panel installations, 455 heat pump water heater installations, 15 loft insulations, and 2 air-to-air heat pump installations per 1000 properties.

Number of installations required per 1000 properties to reach potential

To reach these targets every household would need to do something, and extrapolating this sample of a 1000 properties to the total number of residential properties in Sweden, the yearly renovation rate would need to be increased (from 2022 installation volumes) by 3 to 5 times for heat pump water heaters and solar panels respectively. The average investment needed is 190 million SEK per every 1000 properties. This is of course a huge undertaking. But having the insights on what needs to be done on a property by property level enables a proactive and systematic way of targeting and activating households to improve energy performance. It also makes it possible to continuously follow-up on progress and in a data-driven and systematic way re-target each property in a personalized way.

We help banks power home energy transition at scale

Hemma is built with the sole purpose of providing readily available insights on residential buildings’ energy performance. Our platform helps banks understand the improvement potential of their building stock, set relevant targets for reducing emissions, and translate these targets into concrete actions so that they know what needs to be done. With our plug-and-play user interfaces, banks can proactively support households on their journey to net zero - from identifying the most relevant and necessary renovation activities, to financing, installation and follow up. On the backend, energy performance and consumption data is stored and continuously updated, enabling banks to have an always updated view of the current state of their building stock.

Interested in learning more about our solutions and how it can help you power green transition? Get in touch

About Hemma

Hemma is the leading SaaS-platform in Sweden for collecting, processing and delivering high resolution, primary data for energy and climate transition of private-owned properties. We help mortgage banks operationalize and drive proactive actions in consumer dialogues and all related support processes.