Shortlisted for the PRI Awards 2024: System stewardship

PRI Awards 2024

Organisation: DWS Group on behalf of the Energy Efficiency Financial Institutions Group (EEFIG)

Signatory type: Investment manager 

HQ country: Germany

Other responsible organisations:

Co-convenors: European Commission, UN Environment Programme Finance Initiative (UNEP FI).

Steering Committee Members: Allianz Investment Management – France, ING, Swedbank, European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), European Mortgage Federation, Efficient Buildings Europe, Climate Strategy & Partners, Energy Efficiency in Industrial Processes (EEIP).

The approach, initiative, or process 

The European Commission and UN Environment Programme Finance Initiative (UNEP FI) established the Energy Efficiency Financial Institutions Group (EEFIG) in 2013. The intention was to facilitate private sector dialogue with policymakers in order to identify and address barriers to investment.

EEFIG represents global best practice for ongoing public-private dialogue about system-level change for energy efficiency. For instance, an EU Commission letter to EEFIG’s Steering Committee in 2020 stated that: “EEFIG is a key driving force in accelerating finance mobilisation in energy efficiency … [EEFIG’s] work directly fed into the EU policy development ….”

Energy efficiency (EE) is even more important now due to:

  • energy security;
  • energy price spikes affecting inflation and the cost of living;
  • extreme climate impacts.

As many oil and gas companies have weakened their climate targets, energy efficiency is of greater importance to reduce oil and gas demand. Energy efficiency is needed for 33% of the emission reductions in described in the International Energy Agency’s net zero scenario. Energy efficiency is also a cross-asset class energy transition investment priority, can create jobs through retrofitting buildings and can improve the competitiveness of European businesses by helping reduce their fixed costs. It can also improve worker productivity and reduce health-system costs by making buildings healthier places in which to live and work.

EEFIG’s first report in 2015 was strongly commended by senior EU and international officials. It supported the EU in establishing energy efficiency as a guiding principle of the Energy Union strategy. The EE-first principle received stronger legal backing in the 2023 revision of the Energy Efficiency Directive.

EEFIG’s research was important for policy developments by the European Commission, including guidance for Member States on the implementation of article 30 of the EED on national energy efficiency funds, financing and technical support and on the interpretation of Article 3 of the EED as regards the EE-first principle.

EEFIG grew to include around 300 mid-level institutional representatives of investors, banks, and other experts. These representatives had varying levels of participation across working groups that wrote reports on:

EEFIG’s members and secretariat wrote the reports, which were published by the European Commission. The reports contributed to improved policymaker and market participant knowledge and better policy proposals.

As part of the REPowerEU Plan, the EU’s response to the hardships and global energy market disruption caused by Russia’s invasion of Ukraine, the 2022 Save Energy communication announced that the Commission would “launch, in cooperation with Member States, a high-level Energy Efficiency Financing Coalition with the financial sector, based on the successful EEFIG.”

During the EU’s Sustainable Energy Week in June 2023, the EEFIG’s final plenary event was held celebrating its achievements. In December 2023, all EU Energy Ministers signed a Joint Statement on the European Energy Efficiency Financing Coalition (‘Coalition’), which was then formally launched in April 2024. UNEP FI remains a privileged partner of the Coalition.

The founding private-sector members of the Coalition were announced in October 2024, with 49 financial institutions joining, including major European banks, investment firms, asset managers, and insurance companies, as well as their respective representative associations. A second call for membership will be published in early 2025.

The involvement of Member States alongside financial institutions and senior policymaker representatives will open a new chapter for public-private dialogue in Europe. The Coalition is an innovative public-private cooperation framework with the financial sector, which will build upon the legacy of EEFIG. The main goal will be to identify actions to improve private financing for energy efficiency.

EEFIG’s work: 2013–2024

EEFIG supported efforts to change private-sector financing practices through:

  • its reports, which included private-sector recommendations;
  • the creation of an EE underwriting toolkit;
  • the De-risking Energy Efficiency Project (DEEP) database that allows public and private financial institutions to benchmark their proposed investments against 37,000+ past projects. EU officials used DEEP data in policy impact assessments.

EEFIG recommendations also informed 100+ EU funded projects that “focused on mobilising stakeholders through capacity building, support to policy elaboration, development of new market standards and preparing the ground for investments.” EU officials designed Horizon2020 and other funding calls for proposals based on EEFIG report recommendations. Examples of such projects included:

  • replicating EEFIG’s public-private dialogue in some Member States;
  • developing tools for de-risking, standardisation and measurement, such as the Carbon Risk Real Estate Monitor (CRREM);
  • developing energy efficient mortgages;
  • developing the investment pipeline;
  • developing innovative financing schemes for building renovation;
  • supporting investments in industry and small to medium enterprises.

EEFIG’s public-private sector dialogue was a forerunner for EU initiatives such as the 2016 High Level Expert Group on Sustainable Finance, Technical Expert Group on Sustainable Finance and Sustainable Finance Platform. EEFIG also supported the 2014–17 G20 Energy Efficiency finance task group and informed the EU’s 2022 creation of the Investors Dialogue on Energy. EEFIG was cited as a best practice example by the Global Commission for Urgent Action on Energy Efficiency.

Indirectly, EEFIG may have helped give the EU confidence in its work with the International Energy Agency, advocating for stronger energy efficiency targets. The result of this work was the COP28 goal to double the rate of energy efficiency improvements.

The EEFIG Steering Committee’s April 2020 letter to the Energy Commissioner made recommendations for the May 2020 Renovation Wave for Europe. This EU strategy restated the EU’s support for EEFIG and kick-started the process to further reform the Energy Efficiency Directive and Energy Performance of Buildings Directive (EPBD). These directives were agreed in 2022–23 by the Parliament and Member States, with stronger targets for Member States to implement over the following two years.

EEFIG identified and documented the key issues driving and preventing energy efficiency investments, it produced tools to help investors and financial institutions to identify and put energy efficiency first, its members helped inform and advance public policy reform and it fully answered key questions about the role of and potential for financial institutions in energy efficiency.

EEFIG demonstrated best practice for system stewardship – the power of cooperation between policymakers and financial institutions. We believe that EEFIG and the Energy Efficiency Finance Coalition meet the aspirations of the Net Zero Asset Owner Alliance Chair’s call to ‘change the rules of the game’ for the prioritisation of investing in energy efficient technologies.

The measures to ensure transparency and involve collaboration

The establishment of the EEFIG involved member experts answering detailed technical questions about energy efficiency that had been uncovered in prior work. EU officials and members agreed to the questions by consensus.

Each question was addressed in a detailed report, often spanning over 100 pages and developed over two years, with input from EEFIG working groups.

Working groups that contributed to the reports included finance and energy/building/industry experts who were critical to answering the questions in sufficient detail and to providing the appropriate breadth of private sector views and experience. The combination of different institutions was vital to the quality of the ten reports written by EEFIG members.

In 2018, the Commission started the EEFIG Steering Committee which included:

  • Allianz Investment Management – France;
  • DWS;
  • private-sector banks (ING, Swedbank, BNP Paribas Fortis from 2021 and previously Triodos);
  • public-sector banks (European Investment Bank and the European Bank for Reconstruction and Development);
  • trade associations (European Mortgage Federation/European Covered Bond Council and Efficient Buildings Europe);
  • experts (Energy Efficiency in Industrial Processes (EEIP) and Climate Strategy and Partners).

The Committee met quarterly to provide strategic guidance and included EU officials covering various directorates. EEFIG’s Rapporteur was the Chief Executive of Climate Strategy and Partners. A Consortium of COWI, the Buildings Performance Institute Europe (BPIE), Climate Strategy and Partners, d-fine, EEIP, EP Group, Fraunhofer ISI, ICCS-NTUA and Viegand Maagøe supported EEFIG. EEFIG Steering Committee and Consortium members frequently spoke at external events.

Annual plenary meetings were held (including virtually during the pandemic). These provided an opportunity for EEFIG to deliver updates and receive feedback from all members and observers. The 2021 and 2022 plenaries and the final 2023 EEFIG event are available on YouTube.

Examples of private work inspired by EEFIG include independent research by Climate Strategy and Partners on mortgage portfolio targets for banks, publicly guaranteed renovation loans and the role of retail lenders in home renovation. Individual EEFIG members provided input into many energy efficiency related reports, which included new policy and market concepts. DWS, for instance, published its analysis of the EPBD implications.

EEFIG built understanding and connections between policymakers and financial institutions through the full EU policy lifecycle, from early stages to changing market practices. EEFIG’s evolution to a Coalition with Member States is a new chapter for energy efficiency policy in the EU and is a model for system stewardship for other environmental and social priorities.

 

PRI disclaimer: This case study aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. It is written by a guest contributor. Authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.

European Commission disclaimer: EEFIG was an initiative co-convened by the European Commission and UNEP-FI with the purpose to identify barriers for investments in energy efficiency and document recommendations for public bodies and market actors on energy efficiency financing. The information and views set out in EEFIG’s reports correspond to those of their respective authors and do not necessarily reflect the official opinion of the European Commission.

DWS disclaimer: DWS is the brand name under which DWS Group GmbH & Co. KGaA and its subsidiaries do business. The DWS legal entities offering products or services are specified in the relevant documentation. The information contained in this document is obtained from sources believed to be reliable. DWS does not guarantee the accuracy, completeness, or fairness of such information. All third-party data is copyrighted by and proprietary to the provider. DWS has no obligation to update, modify or amend this document or to otherwise notify the recipient in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Swedbank disclaimer: This document is intended to be a marketing communication. Note that Swedbank through this document is not providing any advice or soliciting any action and should therefore not be relied upon. This document has been written in the author’s individual capacity.

Topics