This report reviews some of the proposed work on sustainable mortgage -backed securities (SMBS) that have been floated by the Canadian Mortgage Housing Corporation (CMHC) as part of their forthcoming sustainable finance framework.
The research provides a background on the framework, along with examples of the uses and challenges of MBS in a sustainability context. The most notable examples include the largest green bond issuer in the world, the US Federal National Mortgage Association (“Fannie Mae”), which now bundles both multifamily and single-family residential mortgages into green bonds to help recapitalize sustainability-focused lending. There remains a tremendous amount of further research to do, but early indications are show that, without significant programmatic and regulatory work to advance retrofits, the liquidity gap that SMBS could help fill will not solve major limitations in retrofits on their own.
Authors: Hafiz Akinlusi
Supported by: VEC and SFU Beedie School of Business
Focus Category: Green Economy
Published: July 26, 2021