Green finance in Italy: from green mortgages to corporate sustainability

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Published on 13/06/2025

Green mortgages are financial products linked to environmental sustainability. At a time when interest rates are falling and demand for property is rising, understanding how these products work can be helpful.

There is currently no harmonised legal definition. The term commonly refers to mortgages offered on preferential terms either for the purchase of energy-efficient homes-typically rated A or B-or for the energy renovation of existing properties.

According to a study by Banca d'Italia, many banks already offer this type of mortgage, and others are preparing to do so. Between September 2022 and June 2023, the interest rates charged on green mortgages were on average slightly lower-by around 0.07 percentage points-compared with standard mortgages, for borrowers with similar profiles.

As more banks introduce green mortgage products and the market expands, customers may increasingly benefit from lower borrowing costs. In addition to more affordable instalments, buying a green home can also lead to lower energy bills and may improve the property's resale value.

Green mortgages are one practical example of what is known as sustainable finance - finance that takes into account Environmental, Social, and Governance factors, also known as ESG criteria.

Since 2015, the year of the United Nations Paris Agreement, the European Union has introduced a series of measures to help achieve its targets: reducing net greenhouse gas emissions by at least 55 per cent by 2030 compared to 1990 levels and reaching climate neutrality by 2050.

The building sector plays a crucial role in the green transition. As early as 2020, the European Commission Communication 'A Renovation Wave for Europe' proposed regulatory and financial measures to at least double the annual rate of energy renovations in buildings by 2030.

Energy efficiency in construction is also central to the recent EU Directive 2024/1275 (commonly referred to as the Green Directive), which highlights some concerning figures-75 per cent of buildings across the EU are still energy inefficient.

The move towards a low-carbon economy also depends heavily on expanding the use of renewable energy sources, such as solar and wind power. A recent analysis by the Banca d'Italia showed an acceleration in the installation of renewable energy systems from 2022 onwards, particularly in the solar sector. This growth has also involved self-generation systems for residential, industrial and commercial use.

However, the pace of expansion remains insufficient to meet the targets of Italy's National Integrated Energy and Climate Plan (Piano Nazionale Integrato per l'Energia e il Clima PNIEC), which aims to cover 39.4 per cent of gross final energy consumption and 63.4 per cent of electricity consumption from renewables by 2030. The study also underlined the need to simplify regulations and speed up permitting procedures to support the development of renewables.

In this context, the European Commission has introduced the Omnibus Package, which includes proposals to reduce the administrative burden of sustainability reporting for businesses. Among other things, it suggests raising the size thresholds above which companies are required to disclose information on how their activities align with ESG principles.

These disclosures are often costly to prepare but are essential to attract capital from investors focused on supporting the green transition. It is estimated that the new rules could help businesses save over €4 billion per year.

Nonetheless, in April, EU Directive 2025/794 entered into force. It must be transposed into national law by 31 December and formally postpones the current ESG reporting obligations for businesses.

However, not all feedback has been positive. Some stakeholders have expressed concern that excluding a large number of companies from reporting requirements could weaken the overall impact of the EU's sustainability framework.