Green Bonds: Drees & Sommer Advises LBBW Bank on the Valuation of Real Estate

Own representation based on dena study (2017)

Drees & Sommer has developed a new method of assessing the energy and carbon-efficiency of buildings for the first green bond issued by Landesbank Baden-Württemberg (LBBW). It is now possible, using specified criteria, to identify which buildings in a real estate portfolio are among the top 15 percent in Germany in terms of energy-efficiency, meaning that they comply with the standards of the Climate Bonds Initiative.

Germany has seen growing interest in green bonds. However, there is no standard system for evaluating buildings for green bonds in this country yet. The only guidelines are international ones, including the Climate Bonds Initiative. A non-profit organization, the CBI mainly focuses on investors, its main aim being to promote sustainable investment. To meet the criteria of the CBI, the commercial properties in the portfolio must be among the top 15 percent of the German building stock in terms of their carbon efficiency.

As a basis for the analysis on behalf of LBBW, Drees & Sommer’s experts used official data from the German Energy Agency (Deutsche Energie-Agentur, dena) and the German Energy-Saving Ordinance (Energieeinsparverordnung, EnEV). They established a clear connection between building age and energy efficiency, and were able to develop a method based on this finding.