Global Fintech company OwnCity, based in Los Angeles and Copenhagen, is building a crowdlending platform where citizens can make green investments in energy efficient retrofits of buildings in their own local communities.
Investors are then able to see the tangible environmental and economic changes as a direct product of their investments, whether it be their children’s school or their own office building.
In the EU, buildings account for approximately 40 per cent of all energy consumed. Thus, increasing the energy efficiency of buildings has a significant impact on climate change. The technological solutions and capital are already in place, but awareness seems to be the main challenge to implementation.
“The beauty of capitalism is that as soon as you tie some of your own money into something, then you start to care about the cause. You are both financially and emotionally invested,” says Jens Brandt Nellegaard, CEO of OwnCity.
In the future, the democratisation of green bonds could have a huge impact. While bonds are becoming a prominent mechanism for retrofitting buildings and real-estate projects, not every project is attractive to big developers or Energy Savings Companies (ESCOs).
In the current green bond market, there is an abundance of middlemen and bureaucracy to make sure that the bonds issued are green and that the underlying project is not a hoax. If we can democratise this process, then we can finance climate retrofitting at a low-ticket size, so small- and medium-sized projects have a better chance of happening and inspiring real change in communities.
With the right IoT devices and monitoring of the buildings, these middlemen are not necessary. Moreover, it can be done at a low cost.
“These types of transparent, standardised and data-driven green bonds are the goal when we reach a point of scale where we can talk about the formation of a new asset class – one we can call energy efficiency. The last important ingredient is liquidity, as payback periods of these projects can be rather long,” says Nellegaard, of OwnCity.
Energy efficiency is a whole ecosystem of solutions, but it’s not just about saving the planet. There are obvious financial incentives for retrofitting cities and communities. Ideally, the utility savings from the retrofitting of a building would be enough to pay back the investors for greenifying each building.