AIB Group Pushes Green Lending Agenda For Real Estate Loans
Commercial and residential developers will need to adhere to strict sustainability rules to access finance from AIB, after the bank issued ambitious new sustainability targets.
AIB has set carbon reduction targets for around €43.5B of its customer loans, representing three-quarters of its lending portfolio, the company said.
The bank announced that by setting these targets, it is aligning with global banking best practice and the “most ambitious Paris Agreement target” in order to limit the global average temperature increase to 1.5C above pre-industrial levels.
AIB’s 2022 Sustainability Report showed that AIB has plans to reduce carbon emissions significantly for its commercial real estate, residential mortgages and corporate loan books by 2030.
For real estate, the bank is aiming to achieve a reduction in emissions intensity of 58% per SF on homes funded by €29.4B of residential mortgages and by 67% per SF on commercial real estate funded by €5.6B of loans.
“AIB’s new green lending grew by 65% to €3.3B in 2022, accounting for 26% of all new lending, while our green mortgage products represented 28% of new mortgage lending. We are now further aligning ourselves with the global sustainability agenda,” AIB Chief Sustainability and Corporate Affairs Officer Mary Whitelaw said, speaking at the launch of the AIB Sustainability Report.
AIB has also said that its electricity generation portfolio now primarily consists of renewable energy assets such as offshore wind.
Furthermore, AIB itself has entered into a Corporate Power Purchase Agreement with NTR to source energy from two dedicated solar farms under construction in County Wexford, which will provide up to 80% of AIB’s own power requirements.
Separately, the Irish government had looked set to sell further blocks of its ownership in AIB before the current banking crisis, but it is likely to put such plans on hold.
AIB received a €20.8B bailout after the last banking crash but its loan book is finally starting to grow again, although last year’s 5% increase was driven mainly by an initial batch of loans acquired from Ulster Bank.
AIB had also cut its nonperforming loans from a peak of €31B in 2013 to €2.2B at the end of last year. To date it has not reported an increase in problem loans despite the current cost-of-living crisis.
