Bank of Cyprus ‘goes green’ on its products and services

• ‘Green’ home loans,

• Eco-friendly renovation loans

• Energy loans for solar panel installation

Climate change poses a major challenge in the current era. The international community recognises the need to tackle climate change, and has already taken steps, for example via the Paris climate accords and the UN Sustainable Development Goals, Agenda 2030.

As the driver of the economy, the financial system is expected to play a leading role in adopting ESG practices as well as in what we call the ‘Green Transition’, by mobilising private capital toward sustainable investment guided by the three ESG criteria (Environment, Social, Governance). These criteria combine growth and economic performance with social and environmental sustainability, while creating eco-friendly products and services.

At the same time, banks need to integrate sustainability across the spectrum of their operations, factoring in environmental and social risks vis a vis their strategy, governance and risk management processes.

Already banks have begun making available products that are friendly to the environment, helping customers either save energy or reduce their carbon footprint.

For example, banks offer loans for the purchase of electric or hybrid vehicles, loans for installing solar panels, and loans for energy upgrades at residences and business premises. During the last five years the banking sector in Cyprus has loaned out over €200 million to individuals and corporations for energy upgrades to buildings, the purchase of vehicles with low or zero carbon emissions, the installation of solar panels, and the financing of investments in renewable energy projects.

The Green Home Loan

Recently Bank of Cyprus rolled out a new Green Home Loan Scheme, in this way playing its part in achieving the goal of ‘de-carbonising’ home loans and also reducing the climate transition risk it is exposed to. Green Home Loans are granted for the purchase of constructing a primary residence or a vacation home with a Class A energy performance certification, issued before and after the building is built. Where the Class A energy performance certificate presented by a customer was issued after the construction of the building, the loan is offered with a variable interest rate that is 0.20% lower than other home loans with variable interest rates offered by Bank of Cyprus. Where the same certificate was issued prior to the construction of the building, the loan is offered with a variable interest rate that is 0.15% lower than other home loans with variable interest rates. And once the customer submits the Class A energy performance certificate after the building has been built, then the interest rate is cut by a further 0.05%.

Financing can reach up to 80% of the value of a property where the property is a primary residence, and up to 70% of the value where the property is a vacation home. The repayment period ranges from 10 to 35 years.

Home renovation

Bank of Cyprus also offers eco-friendly loans for home renovations and energy upgrades. This applies to owner-occupied dwellings and to vacation homes up to €30,000. If the customer possesses an energy upgrade certificate, he/she is credited to the tune of 1% of the loan amount (maximum amount is €300) in his/her current account. The minimum repayment period is five years, and the maximum repayment period is 20 years – in cases where changes occur to the building’s layout. No initial bank fees apply.

Energy Loans for energy-saving

Lastly, Bank of Cyprus offers the Energy Loan for energy-saving, and for installing solar panels and other domestic appliances. The loan is offered at a lower interest rate compared to other personal loans that come with personal collateral. The loan amount can go as high as €15,000, with the option to finance the entire invoice amount without requiring own contributions.

As at 31 December 2023, the total eco-friendly loans issued by Bank in Cyprus came to €24.5 million, up from €20.9 million for the same period of the previous year.

During 2023 the Bank made considerable progress in incorporating climate and environmental risks in terms of its risk management processes and in its overall operating mindset.

Principles for Responsible Banking

Bank of Cyprus is the first lender in Cyprus to sign the UN Principles for Responsible Banking – a uniform framework for a sustainable banking industry ensuring banks bring their strategies and practices in line with the goal of positively impacting society and the environment. Having signed the Principles, the Bank is now obligated to focus on sustainable financing, implement best practices and work with others to develop novel tools that will benefit the industry. It is committed to applying the six principles of Sustainable Banking – Alignment, Impact & Target Setting, Clients & Customers, Stakeholders, Governance & Culture, Transparency & Accountability.

By applying Responsible Banking, by offering products and services, and through their relationships with the community, banks can support the changes necessary to attain a shared prosperity, forging a positive future for people and the planet alike.

Meantime in a bid to enhance its risk management framework vis a vis climate change, while also augmenting its ability to identify future opportunities, the Bank is currently in the process of introducing a new ESG-based performance chart. The new chart will form part of the process of assessing new loans. In this way it can more precisely identify potential ESG-related risks and also set up a communication channel with customers, so that they can comply with upcoming European Union legislation regarding disclosures e.g. the Corporate Sustainability Reporting Directive.

Banks today must gauge their environmental and social impacts, and offer environmentally-friendly products and services so as to transition to a sustainable economy.