SOCIETE WALLONNE DU CREDIT SOCIAL

This framework loan will support the Societé Wallonne du Crédit Social (SWCS), a regional promotional bank specialising in energy-efficient renovations in private residential buildings in the Walloon region, Belgium.

The loan will support the energy-efficient renovation of approximately 16,550 houses and apartments in the Walloon region between 2024-2027. It will contribute to Renopack, an interest-free loan provided by the Walloon government to finance energy-efficient home renovations for less-privileged populations.

The Project's investments in Energy Efficiency ('EE') will support the European Union's ('EU') and Bank's priorities in the energy sector and the EIB's Climate Action objectives (climate change mitigation).

The implementation of the EE components financed under this Project will contribute to the achievement of the post-COVID reconstruction targets of both Belgium and the Walloon region, mainly a Cohesion Region, and will support the EU targets for EE.

The Project is fully aligned with the EU Energy Performance of Building Directive ('EPBD'), with the Energy Efficiency Directive ('EED'), and with REPowerEU.

The Project will generate a very good Economic Rate of Return ('ERR') of 26.4% and has an excellent social benefit (16.6%) when integrating the extended building life.

The EE component addresses several market failures. Through energy savings, EE sub-projects reduce carbon emissions and air pollution, increase comfort, air quality in the buildings, and reduce dependency on energy imports, social and public benefits that are not fully internalised by private investors. In addition, 'Société Wallonne du Crédit Social' ('SWCS'), the Borrower, has a clear mandate to help the most vulnerable homeowners, with an appropriate support in regard to the complexity of the sub-projects and the situation of the homeowners.

The high transaction costs associated with EE due to their fragmented nature are typically not internalised in the investment rationale of private financiers, who do not have sufficient flexibility nor the market know-how to finance EE at scale. Hence, EE renovations in buildings suffer from a chronic lack of investments.

In this context, the EIB loan has features that no other bank can provide to the Borrower: an availability period of 3 years, a grace period of 3 years and a maturity of up to 22 years. The EIB loan will also help the Borrower diversify its financing resources as well as attracting public funds (including grants), homeowners' financing and commercial banks.

The EIB will receive annual monitoring reports to follow the progress of the Project, particularly with regards to energy savings, and the Promoter/Borrower is also in discussion with EIB for a future ELENA support ('European Local Energy Assistance').

This operation aims to generate environmental benefits by financing sub-projects focused on energy efficiency involving the reduction of energy consumption, as well as mitigation and adaptation solutions to climate change. Each sub-project will be limited in size and its negative environmental impact will be limited due to its scale, location and technical nature.

In most cases, EU Directives on public procurement will not apply, as the financed building works will be ordered and carried out by individual homeowners, who are the final beneficiaries. However, public procurement rules will apply to contracts between SWCS and artisans or other companies.