Green Covered Bonds as instruments for sustainable financing of the real estate market in Poland

Abstract

Objective: The purpose of this article is to identify factors influencing the development of green covered bonds in Poland. The domestic green covered bond market and PKO Bank Hipoteczny SA, as a pioneer of international green mortgage bond issuance, were chosen as a case study.

Material and methods: The study applies a case study approach to examine the green mortgage bond market in Poland and identify barriers to its development.

Findings: The development of the green covered bonds market will not be possible without the implementation of systemic solutions, including incentive schemes specifically designed for mortgage banks and other market participants. A significant barrier is the limited supply of environmentally friendly properties in Poland.

Research limitations: Insufficient legal and uniform terminology for green covered bonds. A clear limitation in the research is the lack of sufficient transparency and understanding of this topic in the Polish market, as well as the absence of uniform terminology and a legal definition of green covered bonds.

Research implications: There is a need to foster greater understanding of green financing mechanisms among regulators and policymakers in Poland. The development of the green covered bonds market requires a comprehensive systemic approach, including the creation of incentive schemes to promote green covered bonds (e.g., fiscal incentives). This includes support for mortgage banks as issuers of green covered bonds, investors purchasing these bonds (with the purchase of green covered bonds receiving particular encouragement), and borrowers seeking green financing for environmentally friendly and sustainable properties