Empowering PENs: Unveiling Sustainable Finance Strategies

Nov 10, 2023

On 2 November, in a virtual convergence of industry and finance experts, the workshop organised by syn.ikia and oPEN Lab offered a deep dive into sustainable urban development and responsible financial strategies. The event brought together frontrunners in ESG finance like Charlie Blagbrough from the Climate Bonds Initiative and Hugh Garnett, Institutional Investors Group on Climate Change and Kay van der Kooi from Triodos Investment Management to explore financial solutions for the development of Positive Energy Neighbourhoods (PENs).

Session 1: Sustainable Finance in Real Estate

Charlie Blagbrough (Climate Bonds Initiative) – The EU Taxonomy and Policy Context

Blagbrough highlighted the EU Taxonomy’s pivotal role, with a focus on using energy demand reduction as a proxy for carbon reduction in buildings. The discussion touched upon whether the Taxonomy should include categories for projects injecting renewable energy back into the grid.

Hugh Garnett (Institutional Investors Group on Climate Change IIGCC) – ESG Finance and Real Estate

Garnett delved into the Sustainable Finance Disclosure Regulation (SFDR) and its potential evolution into a comprehensive labelling scheme. He emphasized the need for projects, like PENs, to be investor-friendly, considering factors like funding mechanisms, clear Return on Investment (ROI), de-risking strategies, and target investors, such as local pension funds and impact investors.

Sheikh Zuhaib (BPIE) – Multiple Benefits Tool for PENs

Zuhaib presented a decision-making tool to assist investors and policymakers in assessing social and environmental externalities of PEN projects. He discussed the challenge of quantifying the multiple benefits of PENs within cost-benefit analysis. The discussion raised queries about whether social and environmental benefits drive investments and how investment decisions could be influenced by future developments of the EU Taxonomy.

Session 2: Presentations of PEN pilots in syn.ikia and oPEN Lab

The second session showcased economic Key Performance Indicators (KPIs) from pilots in syn.ikia and oPEN Lab. Among reflections on the presentations, sources of finance, project ownership, and the right finance mechanisms for PENs emerged as vital considerations.

Kay van der Kooi – Triodos Investment Management, Investment Manager

Van der Kooi’s contribution provided valuable insights into the challenges faced in Positive Energy Neighbourhood (PEN) projects. Acknowledging the myriad of interventions in PEN initiatives, he highlighted the complexities in choosing the right technologies for implementation. This intricate decision-making process, while crucial for project success, adds a layer of difficulty to financing endeavours.

Furthermore, he shed light on the intricacies of demand-side financing, emphasising its inherent challenges compared to supply-side financing. The nuances of saving energy, a core aspect of demand-side financing, pose unique hurdles that need careful consideration in the financial planning of PEN projects.

Jannika Aalto – Green Digital Finance Alliance, Program Manager

Aalto’s intervention added depth to the discussion by focusing on the practicalities of distributing investments in PEN projects. Critical elements such as project ownership were emphasised, underscoring the importance of addressing these details to ensure the smooth execution of sustainable finance strategies.

Aalto also touched upon the type of finance most suitable for PENs, suggesting that infrastructure investments could be a viable option. This strategic insight contributes to the ongoing dialogue on the financial aspects of PEN projects, providing a roadmap for stakeholders to navigate and optimize investment distribution.

The holistic approach of the workshop sought to identify solutions, break down barriers, and promote inclusive and sustainable benefits for stakeholders involved in the creation of PENs. As global sustainability efforts gain momentum, events like these play a pivotal role in driving meaningful change and ensuring a greener, more resilient future for communities worldwide.