Such bonds can provide significant funding for low-cost housing and green residential development
Canada already has a reliable model for its sustainable mortgage bonds in the form of Fannie Mae’s green bonds, according to the Canada Mortgage and Housing Corporation.
Specifically, Fannie Mae’s multifamily green bond framework and Nederlandse Waterschapsbank NV’s SDG housing bond structure can provide “plausible lessons” for Canadian entities considering environmental, social, and governance (ESG) bond programs, CMHC said.
Such bonds can help fund affordable housing programs and green residential development or renovations, the Crown agency said.
“While this type of ESG bond might not be the sole solution to address the affordable housing gap, we expect them to become a catalyst for the housing sector,” said Carlos Mandujano, project manager at CMHC. “[Sustainable mortgage bonds] would also play a relevant role in achieving energy efficiencies.”
At present, almost 19% of emissions in Canada come from the housing segment, Bloomberg reported. The federal government has set its net-zero discharge goal for 2050.
“The stage is set for SMBs to move into the spotlight in the housing market as they continue to grow and become more mainstream, and as the impacts of COVID-19 continue to materialize,” Mandujano added. “It is thus imperative for issuers, investors, housing proponents and developers to have clarity on what SMBs are and why they could be so relevant for Canada and its housing market.”
