Fannie Mae has been recognized as the largest issuer of green bonds in the world for the third consecutive year, with $22.8 billion issuances in 2019. The GSE has issued $75 billion in green bonds and $9 billion in green securitizations over its decade-long life. The second annual Multifamily Green Bond Impact report highlighted a number of benefits to come from the green finance program.
At the end of last year, the total U.S. multifamily mortgage debt outstanding was more than $1.5 trillion dollars with Fannie Mae’s share at approximately $329 billion, or 21% of the market. The green bond issuances specifically support green building and energy and water efficiency retrofits in U.S. rental housing to promote more affordable homes, more cost-effective properties for owners and more sustainable communities.
In the past 10 years, Fannie Mae says approximately 770,000 units were retrofitted or green-building certified, with 213,000 of those in 2019 alone. Tenants at these properties also reported saving approximately $178 per unit per year on their utilities. As a result of Fannie Mae Green Bond-financing, the report says properties are projected to reduce water use by 7.7 billion gallons, greenhouse gas emissions by 528,000 metric tons, and source energy by 7.8 billion kBTU.
"We are proud of the role our Green Financing program plays in building more sustainable and resilient communities and of what we have achieved for investors, lenders, borrowers, and the people who live in the properties we finance. We are excited to build upon the 10 years of progress we have made in green financing, and we will continue to look for new ways to advance this important work," said Jeffery Hayward, executive vice president and head of multifamily at Fannie Mae.
The report outlines the environmental, social, and financial impacts of the green bonds at the portfolio level. In 2019, Fannie Mae says they’ve reduced source energy by 3.6 billion kBTU, avoided 528,000 metric tons of greenhouse gas emissions and saved about 1.8 billion gallons of water. With nearly half of U.S. residents spending more than 30% of their income on rent, investing in energy and water efficient fittings is a long-term solution to help low income tenants live more affordably. Fannie Mae found tenants saved a total of $53 million in utility costs in Green Rewards properties.
The report also boasts significant value for investors, lenders, and property owners through Fannie Mae’s green bonds. The key driver of the green bonds financial value creation is through reduced utility expenses, but also wide-reaching projected economic value through job creation, local spending and community development.
“Our green bonds have a positive socioeconomic impact in the employment sector as well, by creating jobs for workers hired to install energy and water saving improvement measures for Green Rewards properties and to construct properties with Green Building Certification,” the report stated. “The green economy is a fast-growing and well-paying sector in the U.S., employing as much as 10% of the workforce in jobs that typically pay above the nation’s average annual salary.”
When Fannie Mae launched the multifamily green financing 10 year ago, Chrissa Pagitsas, vice president, enterprise environmental, social and governance (ESG) said the goal was to foster greener, more efficient and more affordable housing communities.
“The cumulative and growing volume of our green bond issuances demonstrates the significant demand for quality mortgage financing and investment products that generate positive environmental, social, and financial outcomes.”