Background

Gianluca Natalini has extensive experience in the banking sector, where he initially worked as a consultant for credit risk policies. He subsequently moved into the real estate sector, specialising in ESG issues. He is currently responsible for the CRIF sustainability offering dedicated to the banking sector. During his career, he has actively participated in several European projects on sustainability in real estate, contributing to defining the criteria for green mortgages, the assessment of their risk and the adoption of the EU taxonomy’s technical criteria for high-level clients.

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BUILD UP (BUP): How are financial institutions supporting innovation, evolution, and decarbonisation in the built environment, and what part does CRIF play?

Gianluca Natalini (GN): Financial institutions are assuming an increasingly central role in promoting innovation and decarbonisation in the real estate sector. Traditionally, the role of banks was based on analysing borrower creditworthiness and measuring the property's value as collateral. Today, thanks to regulatory pressure and the changing market landscape, banks have evolved significantly.

Real estate credit assessments are increasingly based on a forward-looking view of property value. This view necessarily incorporates dynamic factors such as physical risks, transition risks, market cycles, and demographic cycles. Furthermore, assessing a building's energy efficiency class and Greenhouse Gas (GHG) emissions have become central elements in assessing their credit policies and strategic objectives. This is because, beyond the evolution of aspects related to financial risk assessment, the real change we are seeing is linked to the explicit responsibility that banks have assumed regarding the impact their business has on the system. And when it comes to building stock, the impact is extremely significant.

At CRIF, my role is focused on supporting financial institutions in fully understanding this change, incorporating new Environmental, Social and Governance (ESG) factors into strategies, policies, and new assessment processes. Furthermore, by actively participating in European projects related to the Energy Efficient Mortgages Initiative (EEMI), my contribution is also linked to the development of a sustainable market for energy-efficient mortgages, supporting the creation of new products, new processes, and new models of bank-customer relationships.

BUP: In your experience, what are the key factors currently shaping financial decisions and triggering investment strategies in the building sector? How can a financial institution enable more sustainable investment strategies within this sector?

GN: As I mentioned previously, in recent years, the criteria underlying financial decisions in the construction sector have changed profoundly. We have moved from a static and simplistic view (market value) to a forward-looking one characterised by numerous changing factors. Key factors include management and maintenance costs –just think of the shock resulting from the increase in utility bills we experienced in Europe with the outbreak of the war in Ukraine– the physical risks of the property (both chronic and acute), and transition risks. These are all factors that until recently were not taken into consideration and are now also factored into market decisions.

The real innovation lies in moving from a static approach to risk assessment to a dynamic one, capable of predicting the future value of properties based on sustainability metrics.

BUP: In line with the EPBD recast, the financial ecosystem is increasingly crucial for facilitating the transition to a more energy-efficient and valuable building ecosystem. Article 17, for instance, extensively covers financial incentives, support measures, and instruments for building renovation, such as energy efficiency loans, mortgages, fiscal incentives, guarantee funds, and public-private partnerships. In your opinion, which of these instruments has the greatest potential for long-term impact? Or is it the strategic integration of several instruments that will yield the best results? 
 
GN: I believe that the strategic integration of multiple tools, rather than the use of a single one, will generate the most lasting impact in the transition to a more efficient and valuable building stock.

Green mortgages and energy efficiency loans are crucial because they directly link the cost of financing to the energy performance of the property, thus creating a financial incentive for retrofitting. However, their effectiveness increases when combined with other measures. Tax incentives, for example, help overcome the initial cost barrier, making interventions more accessible. Guarantee funds and public-private partnerships reduce the risk for financial operators, expanding access to capital and stimulating greater investment in the sector.

Through my experience, particularly with the Energy Efficient Mortgage Initiative (EEMI), I have seen the importance of building a ’home ecosystem’ that connects financial products, service providers, and consultants. Only in this way can we guide customers towards effective choices and guarantee concrete and certifiable benefits, such as those provided by EPC contracts.

In summary, only an integrated approach that combines economic incentives, risk reduction, and a robust technical and information support system can generate real and lasting decarbonisation of the building stock.

‘I believe that the strategic integration of multiple tools, rather than the use of a single one, will generate the most lasting impact in the transition to a more efficient and valuable building stock’

BUP: What kind of toolbox of solutions (e.g. strategies, products, finance, home ecosystem support) can a financial intermediary offer? How can these solutions work in an integrated manner to maximise the impact of financial interventions in a building, addressing the needs of a building owner, asset manager, or company owning the building?

GN: A financial intermediary can provide a veritable toolbox that goes well beyond offering credit and supports the entire sustainability journey in the real estate sector. Among the main tools:

• Targeted financing products: In addition to traditional mortgages, green mortgages and energy efficiency loans are being developed, with more favourable terms for high-performance properties. They represent a direct incentive for redevelopment.
• Advice and information: Banks can guide private clients and businesses towards virtuous choices, explaining benefits, regulations, and available technical solutions, including those aimed at mitigating physical risks.
• Support for the home ecosystem: An increasingly relevant area. Banks can act as facilitators, connecting clients with qualified suppliers, installers, and energy consultants through dedicated platforms. This is a complex but promising model, which can be strengthened through the spread of One Stop Shops (OSS), true technical partners for the banking system.
• Evaluation and monitoring tools: It is essential to offer tools to evaluate the energy performance of properties and measure post-renovation benefits. For example, the use of EPC (Energy Performance Contract) agreements for energy retrofits is viewed favourably by banks, who may even promote preferential treatment.

To achieve maximum impact, these solutions must be interconnected. For example, a customer applying for a green mortgage should have easy access to renovation options, be connected to qualified suppliers, and have tools to monitor the energy savings achieved.

Similarly, a bank could link standard financing conditions to sustainability objectives, encouraging the adoption of sustainability-linked loans. The goal is to build a coherent and integrated approach capable of accelerating the sustainable transition of the building stock.

BUP: Could you share some tangible examples of financial support for the construction and building sector in Italy and Europe? In these instances, how have locally available funds been leveraged by private financial means, including other banks?

GN: In Italy, the most emblematic case was the Superbonus 110%. Despite some management challenges, these instruments have triggered significant private investment, spurring renovations and the adoption of more efficient solutions. Banks have played a key role: not only in providing bridging loans to businesses and condominiums, but also in purchasing tax credits, injecting liquidity into the system, and acting as intermediaries for the transfer of credit. It may not have been a virtuous case, but it is a clear example of how public funds have triggered the intervention of private capital.

At the European level, the Energy Efficient Mortgage Initiative (EEMI), in which I actively participate, represents a sector-specific initiative that stimulates private investment. The goal is to create a harmonised market for highly energy-efficient mortgages, linking cost savings and increased property value to more advantageous financing terms. This is not a public fund, but a best practice that guides banks to use their own resources for sustainable products, within a structured and recognised framework.

Another example is the European project DeliverEEM, in which I am directly involved. This is an EU-funded R&D initiative that aims to reduce the risks associated with energy efficiency investments and better integrate ESG factors into real estate valuations. The project aims to provide useful tools for mobilising private capital: for example, by analysing the correlation between energy performance and default risk, or by defining decarbonisation blueprints for financial institutions.

In all these cases, the principle is the same: using public resources and regulatory initiatives as catalysts to direct private capital towards sustainability objectives in the construction sector.

 ‘At the European level, the Energy Efficient Mortgage Initiative (EEMI), in which I actively participate, represents a sector-specific initiative that stimulates private investment’

BUP: Mentioning two initiatives linked to your experience, the EEMI and the EU project DeliverEEM, what are the key lessons learned on financing to decarbonise the built environment, and what trends do you anticipate for the near future?

GN: The experiences gained with EEMI and DeliverEEM have offered valuable insights into how to effectively finance the decarbonisation of the building stock. With EEMI, we understood that, although there is strong market interest in ’green’ financial products, such as energy-efficient mortgages, a structured ecosystem is needed to foster their adoption. It is essential to build a virtuous cycle that connects innovative products, qualified providers, and a favourable regulatory framework. The benefits extend beyond financial institutions and consumers, also contributing positively to the community in terms of lower emissions and increased property value. My contribution has focused on defining best practices and harmonising them at the European level.

With DeliverEEM, we are deepening the connection between sustainability and risk. A key lesson is the need to more robustly integrate ESG factors into real estate and financial valuation models. For example, we are studying the correlation between energy performance and probability of default (PD), or loss given default (LGD), also considering physical risks such as floods or earthquakes. This is crucial to providing investors with a more accurate risk picture and promoting regulatory treatment consistent with EBA guidelines. Furthermore, we are developing a blueprint to help financial institutions define their decarbonisation pathways.

Looking to the future, I see some clear trends emerging:

• Greater data integration: The inclusion of specific data on energy efficiency and climate risks in credit assessments will become increasingly central.
• Standardisation and taxonomy: The use of common metrics will increase and the application of regulations such as the EU Taxonomy will be strengthened, to direct investments towards truly sustainable activities.
• Innovative financial instruments: In addition to green mortgages, products will also be developed that reward climate resilience and the use of sustainable materials.
• Advisory role of banks: Institutions will assume an increasingly active role within the housing ecosystem, connecting all the actors in the renovation supply chain.
• Focus on existing assets: Attention will gradually shift from new buildings to the renovation of existing buildings, which accounts for the largest share of emissions.

In short, the financial sector will play an increasingly important role in the sustainable transition, not only as a credit provider but as an active, data-driven, and long-term leader.