Fannie Mae green bonds program could be greenwashing

Fannie Mae’s green bond program to spur efficiency upgrades may be falling far short of its goals, according to analysis by Grist.

A Grist report says that about 1,600 of the 3,800 properties that had loans packaged into “green” mortgage-backed securities saw improvement in their energy scores within a median period of about two years. But more than 800 properties that the online publication examined saw lower or identical energy scores in the most recent data year compared to their scores at loan issuance.

“Whether or not Fannie Mae’s green bonds program is driving significant decarbonization and efficiency improvements is very much an open question,” Grist says. “The value of the program is unclear even in cases where energy savings did improve: About a fifth of the buildings enrolled from 2016 through 2019 performed worse than the median U.S. building even after fulfilling program requirements.”

Another criticism: Participation is highest in states and cities that already have stringent building energy efficiency codes. That means some of these building owners may have pursued green improvements without Fannie Mae’s incentives.