Our Next Chapter in Green Bonds Leadership
This week, Fannie Mae released our annual Green Bond Impact Report, "Our Next Chapter in Green Bonds Leadership," showcasing the tangible environmental, social, and economic impacts generated by our green financing and green bonds. Over the last decade, Fannie Mae's Green Bond Business has built on our company's mission to expand access to affordable housing through the support of more resilient and sustainable homes and properties across the country. By harnessing the power of the capital markets, we are making important strides in accelerating the greening of the U.S. housing supply, reducing the housing sector’s carbon footprint, contributing to a low-emissions economy, lowering utility costs for homeowners and renters, and creating jobs, while offering high-quality and transparent investment opportunities that provide measurable positive results.
Since establishing our Multifamily Green Financing Business in 2010 and issuing our first Multifamily Green Bond in 2012, we have grown this business to nearly $88 billion in green bond issuances as of year-end 2020.
Fannie Mae's Green Bond Business also marked an important milestone in 2020. Building on our proven leadership and expertise with multifamily green bonds, we expanded our Green Bond offerings to include single-family properties with the issuance of our first Single-Family Green Mortgage-Backed Securities (MBS) on the 50th anniversary of Earth Day. These MBS are an innovative offering backed exclusively by loans financing newly constructed residential homes that are ENERGY STAR Certified (Version 3.0 or higher), which on average are 20% more efficient than single-family homes built to standard building code. The loans underlying these MBS meet all of Fannie Mae's underwriting standards and are fully guaranteed by Fannie Mae.
In our first year, we issued approximately $94 million in Single-Family Green MBS. While that represents only a small part of our overall Single-Family Business, we are still in the early stages, which is by design. We started small so we can develop this robust single-family green business over time to meet market demand. As our track record with multifamily green financing has shown, we can – and we intend to – leverage our scale and capacity to continue to build the green bond market through both our single-family and multifamily issuances. This is a significant opportunity for our organization to create even greater positive impact through our Green Bond offerings and is an important step in aligning our business activities with measurable environmental, social, and governance (ESG) outcomes. And, it demonstrates our commitment to leveraging our position in the marketplace to explore and pioneer other new solutions that promote the growth of an active, global green bond market – one that supports more affordable and sustainable communities and reduces housing's environmental impact.
The housing sector leaves a significant footprint – residential households account for roughly 20% of all greenhouse gas emissionsi and use 9.7 trillion gallons of water annually across the United Statesii. As a leading provider of mortgage financing in the U.S. and the largest issuer of green bonds in the world, Fannie Mae is uniquely positioned to be a bridge between the capital markets and the housing market to reduce that footprint. By purchasing mortgages backed by properties that meet our rigorous criteria for energy and water efficiency and/or renewable energy generation, and packaging those mortgages into MBS, we provide an opportunity for global investors to support investments that make a positive difference. In turn, investors are drawn to our Green Bond Business for its robust quality, integrity, and transparency, and because of its third-party validation. We're proud that both our Multifamily and Single-Family Green Bond Frameworks are aligned to ICMA Green Bond Principles and have been evaluated as Light Green or better by CICERO, a leading global provider of green ratings for bonds.
We are excited to see continued interest in our Green Bonds and the overall desire in the market for more impactful investing. Here are some of the impacts of our cumulative Green Bond issuances from 2012 to 2020*:
- Green Single-Family and Multifamily properties financed by Fannie Mae are estimated to save 9.5 billion kilowatt British Thermal Units (kBtu) of source energy and prevent 634,000 metric tons carbon dioxide equivalent (MTCO2e) of greenhouse gas emissions annually. That is the equivalent of removing roughly 137,000 passenger vehicles from the road for a year.
- Green Multifamily properties financed by Fannie Mae are estimated to save 8.5 billion gallons of water annually.**
- Green Multifamily properties financed by Fannie Mae are estimated to save tenants $146 million in utility costs, or an average of $184 per family, per year.** We know these savings can make a real difference for many households, as more than 90% of all multifamily units we financed in 2020 were affordable to families earning at or below 120% of the median income in their area.
- In Green Single-Family properties, homeowners are estimated to save $843 in utility costs per home, per year,*** helping to make housing more affordable over the long term. .
- Fannie Mae's Green Bonds Business has resulted in 872,000 Multifamily properties being retrofitted or green building-certified,** and has created or supported an estimated 224,000 well-paid jobs.
- An estimated $9.5 billion in wages were paid to construct or retrofit green properties through 2020, contributing $19.9 billion to U.S. GDP.
- Each dollar invested through Fannie Mae Green Bonds generates $2.83 in estimated economic output.
* All numbers are based on one-year estimated impacts and reflect both Single-Family and Multifamily issuances unless otherwise noted.
** Includes estimated impacts only from Fannie Mae Multifamily Green Bonds.
*** Includes estimated impacts only from Fannie Mae Single-Family Green Bonds.
Behind these numbers are real-life stories of our Green Bond Business at work. For example, a $25 million Fannie Mae Green Rewards Mortgage Loan helped Chandler Village in Arizona make substantial improvements that will result in significant long-term energy savings. All 127 units in the Chandler Village property are affordable for tenants earning 50% or less of Area Median Income. The rehabilitation will include the installation of energy-efficient windows, appliances, and HVAC systems; low-flow faucets and showerheads; and LED lighting upgrades. With Green Rewards proceeds also going toward the installation of solar panels on the roof and carports, Chandler Village is expected to see estimated total energy savings of more than 72%.
Creating positive societal impact through our business is in Fannie Mae's DNA. We believe that doing well as a company is inseparable from doing good for the communities we serve. Our Green Bond Business, and our overall ESG strategy, builds on our long-standing mission to expand access to affordable, stable housing and improves the lives of the people who reside in the homes and properties we finance, while contributing to local economies and reducing the overall environmental footprint of the housing sector. You can read more about this commitment and the tangible benefits of our efforts in our 2020 Green Bond Impact Report.
Senior Vice President – Environment, Social, and Governance (ESG)
June 16, 2021
i Goldstein, Gounaridis, and Newell, "Carbon footprint of household energy use"
ii Cheryl A. Dieter, Molly A. Maupin, Rodney R. Caldwell, et al., Estimated Use of Water in the United States in 2015, U.S. Geological Survey Circular 1441, U.S. Department of the Interior, p. 23. 26,600 million gallons per day implies 9.7 trillion gallons per year.