Green loans and mortgages: harmonizing sustainability and real estate in the EU

This article examines the pivotal function of green finance in promoting sustainability within the real estate and construction sectors, with a specific focus on green mortgage loans and retail loans. From this perspective, it also addresses the issue of whether green financial products require regulatory approaches distinct from their conventional or ‘brown’ counterparts. A joint analysis of recent European Union (EU) legislation, the European Banking Authority’s recommendations, and relevant European Court of Justice judgments reveal the sufficiency of existing legal instruments to integrate sustainability objectives. Furthermore, the article emphasizes the crucial role of private law and the complementary function of soft law in achieving environmental goals. It concludes that a unified regulatory approach would better prevent greenwashing, enhance market efficiency, and accelerate the green transition for households and small and medium-sized enterprises (SMEs) within the EU’s ambitious sustainable development goals.