Net carbon positivity in European green real estate finance

The buildings sector accounts for a substantial share of the world's carbon emissions. According to the United Nations Environment Programme (UNEP) (2024), a significant gap remains between current emissions and the decarbonisation pathway required to meet the Paris Agreement goals. This makes the systematic exploration of so-called overshoot pathways a priority for science and policy (Intergovernmental Panel on Climate Change, 2023; Schleussner et al., 2024). While buildings have become more energy-efficient in the past decade, the relative and absolute share of embodied emissions has, in fact, increased (Röck et al., 2020; Talvitie et al., 2025). Emission reduction alone is not sufficient to reach full “net zero” (IPCC, 2023) or carbon neutrality – the balance between greenhouse gas (GHG) emissions and removals (Kuittinen et al., 2023). The focus needs to shift from a mere reduction of the carbon footprint towards actively removing and permanently storing carbon from the atmosphere to compensate for residual emissions (IPCC, 2023). Solutions that remove more carbon than emit it, that is whose “carbon handprint” (Malabi Eberhardt et al., 2024) is greater than the carbon footprint, are defined as net carbon-positive (NCP) solutions in this study. While carbon handprint solutions for the built environment exist, some are still at their early stages while others are more developed. According to Kuittinen et al. (2023), the most climate relevant and applicable technologies include long-lived biobased materials and composites, CO2-cured and carbonated concrete, biochar for landscaping, urban soils and trees and air-conditioning with direct air capture (DAC). UNEP (2024) also identifies nature-based solutions and biophilic designs, along with climate resilience-enhancing methods, as essential for achieving carbon neutrality, while carbon storage and sequestration (CSS) solutions offer multiple sustainability co-benefits (Ariluoma et al., 2024; Papari et al., 2024).

The shift to a carbon-neutral built environment necessitates a significant increase in green investments. Real estate is highly dependent on debt funding, with a typical debt-to-equity ratio spreading from 1:1 to 8:1. Thus, banks have substantial steering power to move the needle in the right direction (Park and Kim, 2020; World Economic Forum, 2024). However, research suggests that banks are rather conservative and reactive in their funding policies due to strict prudential requirements (Castren and Russo, 2024; Dikau and Volz, 2021; Park and Kim, 2020) and lack of harmonised green incentives (Gasparini et al., 2023). Consequently, banks' green building criteria are limited in practice to easily quantifiable energy metrics, such as energy performance certificates (EPCs) (European Central Bank, 2024; Holopainen et al., 2025) and green building rating systems (GBRS) (Leutner et al., 2024). In Europe, a strong driver for the energy-centricity is the European Union's Taxonomy regulation (EU/2020/852), enforcing definitions for “green” economic activities, including the construction, renovation and ownership of buildings (Schütze and Stede, 2024). Energy-related metrics support buildings' carbon footprint reductions but contribute little to carbon handprint performance. Consequently, banks' green loan criteria often reinforce existing standards rather than accelerate the transition (Holopainen et al., 2025), leaving net-zero ambitions unmet (Park and Kim, 2020; WEF, 2024). As key gatekeepers of project finance, banks therefore play a decisive role: without formally recognising carbon removal and storage in lending criteria, developers have limited incentive to invest in such solutions.

The misalignment between current green lending criteria and the need for net-positive buildings poses an intriguing challenge for real estate finance research. On the one hand, a substantial body of literature examines how established green building ratings (GBRS and EPCs) and sustainability regulations influence real estate finance and banking (Leutner et al., 2024; Park and Kim, 2020). On the other, a growing stream of research explores the net positivity potential of (physical) buildings (Malabi Eberhardt et al., 2024). Yet, these strands of literature remain disconnected, revealing a theoretical gap in understanding how recognised carbon removal technologies for buildings could be effectively applied in real estate lending. To our knowledge, this is among the first studies to address this gap by examining European banks' approaches to net positivity and the potential to integrate net carbon positivity into green property lending frameworks.

• How do banks in Europe address the need for net carbon positivity in real estate finance?

• What is the readiness of banks to adopt net carbon positivity or “carbon handprint” in their green property loan criteria?

Sustainability demand in real estate finance is primarily driven by global climate policies, affecting investors and regulators and shaping banking across the globe (Akomea-Frimpong et al., 2022; Park and Kim, 2020). Despite policy momentum, global building decarbonisation remains constrained by ineffective regulations and codes, knowledge gaps, inadequate incentives and lack of public and private investment (United Nations Environment Programme Finance Initiative, 2026). In addressing these challenges, banks can play a pivotal role by supporting the implementation of decarbonisation policies, improving the bankability of green projects and connecting and educating stakeholders (UNEP FI, 2026). Consequently, banks' green funding frameworks (GFFs), defining green eligible projects, serve as a key mechanism for translating global policies into the real economy.

In Europe, the sustainability legislation is considered particularly advanced, with stringent policies and reporting requirements for businesses and financial institutions (Wang et al., 2024). The EU sustainability regulations are spearheaded by the EU Taxonomy framework (EU/2020/852), establishing a classification system for environmentally sustainable economic activities to guide green investment (Schütze and Stede, 2024). Its implications for financial institutions have been substantial, giving rise to a growing body of literature examining its role in green finance (Brabec and Macháč, 2026). Existing studies highlight several benefits, including enhanced alignment and transparency (Hummel and Bauernhofer, 2024), better political predictability (Papari et al., 2024) and reduced greenwashing risks (Norang et al., 2023). At the same time, the Taxonomy has faced criticism for its limited effectiveness in steering the green transition (Hummel and Bauernhofer, 2024), ambiguities related to data and interpretation (Cochran et al., 2025; Garcia-Torea et al., 2024), increased reporting burdens (Kirby et al., 2024; Kirschenmann, 2022) and siloed definitions (Papari et al., 2024).

In addition to the Taxonomy, the buildings sector has long adopted various green frameworks aimed at reducing its environmental impact. Commercial GBRS such as LEED (Leadership in Energy and Environmental Design) and BREEAM (Building Research Establishment Environmental Assessment Method) are widely applied in commercial real estate (CRE) (Organisation for Economic Co-operation and Development, 2022), with multiple studies reporting sales and rental premiums on green-labelled assets (Bond and Devine, 2016; Fuerst and McAllister, 2011; Leskinen et al., 2020). While the exact value-adding mechanism of multi-attribute certifications is unclear (Michl et al., 2016), single attribute certifications like EPCs are generally associated with lower transition risks (Bell et al., 2023) and lower operational costs (Brounen et al., 2020), directly impacting the asset's value. The quantifiability of energy performance and the relatively standardised methodologies for estimating the operational GHG emissions of buildings have made the EPCs a key tool for green real estate finance (ECB, 2024). Additionally, investors and banks still commonly ask for GBRS as proof of meeting the highest environmental standards (OECD, 2022). However, despite the market and regulatory demands, literature has questioned the real effects of these requirements on the “greening” of the financial sector (Kirschenmann, 2022).

Compared to the green real estate finance literature, climate policy research has long recognised the need to implement drastic solutions to remove GHGs from the atmosphere and avoid risks of carbon overshoot (IPCC, 2023; Schleussner et al., 2024). These solutions entail technologies aiming at net-positive contributions also portrayed as “carbon handprints” (Malabi Eberhardt et al., 2024). While some net-positive solutions – such as negative emission technologies (NETs) – have faced criticism due to their riskiness and low technical readiness (Anderson and Peters, 2016), other, more mature technologies like carbon capture (utilisation) and storage (CCS or CCUS) are often referred to in climate policy discussions (Anderson and Peters, 2016; EU/2026/285, 2026; Kuittinen et al., 2023). In the buildings sector, carbon-storing materials could prove particularly impactful as the share of embodied emissions rise with higher energy efficiency of buildings (see Röck et al., 2020; Talvitie et al., 2025). Ultimately, buildings with a carbon handprint could provide “potential climate benefits that could not be created without the given building project and that may compensate the carbon footprint of the building during its life cycle” (Malabi Eberhardt et al., 2024). In their thorough review, Kuittinen et al. (2023) discuss the climate potential and applicability of different carbon handprint technologies for the built environment, including solutions for capturing and storing carbon on- and off-site. Table 1 presents a list of the most promising CSS solutions based on their ranking.

Despite technological progress and climate urgency, net positivity remains largely absent from green real estate finance literature. With current green metrics and finance frameworks proving insufficient (Kirschenmann, 2022; Park and Kim, 2020), more impactful lending criteria are needed, calling for interdisciplinary research at the intersection of buildings, finance and climate policy literature.

This study adopted qualitative content analysis to investigate how European banks address net carbon positivity within their GFFs. As official policy documents defining eligibility criteria for green lending, GFFs constituted the primary unit of analysis. The research consisted of two phases: first, analysing the NCP orientation of European banks' GFFs, and second, evaluating the potential for integrating NCP indicators into existing green building lending criteria. The first phase entailed content analysis of banks' frameworks with pre-defined coding. As “net carbon positivity” and “carbon handprint” are not widely used in academic literature, the authors first reviewed related studies on climate net benefits to identify associated terms and concepts to be used as codes. In addition to terms explicitly referring to NCP (e.g. “net-negative emissions”), the literature search also attempted to capture the wider “word cloud” of relevant terminology, more implicitly connected to NCP (e.g. “embodied carbon”). The search resulted in a list of terms depicted in Table 2 below. The table was used as the coding protocol for the content analysis. A similar process was conducted for GHG-reduction language, distinguishing explicit codes (e.g. “emission reduction”) from implicit ones (e.g. “carbon neutrality” and “low-carbon”).

The banks were selected based on the following criteria: First, the bank must have its headquarters and significant market presence in Europe. Second, it must be active in property lending, either residential or commercial. Third, the bank must have a publicly available GFF with explicit criteria for “green buildings”. The sampling resulted in 33 leading property lenders headquartered in 11 European countries and operating across all major European markets. Germany, UK, France, Sweden and Spain formed the core markets, with Poland, Austria, Italy, the Benelux region, Ireland and the Czech Republic representing important secondary markets. All GFFs were retrieved from banks' websites between 22 August and 29 September 2025. The list of banks, with information on their GFFs, is described in Table 3.

Using the coding protocol, the initial coding of the documents was conducted by one researcher who recorded the raw coding data in a shared table accessible to all authors. The table used binary coding, where “1” indicated the presence of a code in the respective GFF and “0” its absence. Beyond keyword search, the coding process included reviewing each GFF in full to interpret the context of identified terms, decrease the risk of superficial textual matching and ensure no relevant terms were missed. The coding table also contained a notes field to document contextual observations regarding green buildings, such as “CCUS used as a separate eligibility category, not in the buildings context”.

After the initial coding, the researchers discussed the results in an internal workshop, revisiting the source documents and resolving any coding ambiguities to ensure consistent interpretation of the data. Finally, the data were classified into three, reflecting the NCP evidence: “outcomes” (Net-positive outcomes mentioned explicitly), “solutions” (NCP technologies mentioned explicitly) and “absent” (no evidence of either type). After this, the first two categories were classified in terms of context: “general” (mentioned as part of the bank's general targets or strategy), “green buildings” (mentioned in the green buildings category) and “other category” (mentioned in other categories than buildings).

In the second phase, the authors reviewed the GFFs' green building criteria for their underpinning standards and specific metrics and contrasted them in a systematic manner with the nine NCP technologies by Kuittinen et al. (2023). Each NCP technology was first classified according to its functional role within the respective green building criterion, distinguishing whether the technology constituted a primary or secondary function of the eligible activity. For example, within the “new construction” category, the NCP technology “wood, bamboo and straw for construction” was classified as having a primary function because it represents a principal construction material. In contrast, within the “EV (electric vehicle) charging stations” category, the same technology was classified as “secondary”, as it is not essential to the primary purpose of the activity. This binary classification was adopted because technologies serving a primary function are expected to contribute more substantially to the building's overall carbon balance than technologies serving a secondary function.

Subsequently, the overall NCP impact potential of each technology within each green building criterion was evaluated by combining the function classification with the technology's current applicability (see Kuittinen et al., 2023). Because technologies serving a secondary function were assumed to have a consistently lower contribution to NCP, impact potential was classified into three levels: “high”, where a technology performs a primary function and has high applicability; “medium”, where a technology performs a primary function but has only medium applicability and “low”, where a technology performs a secondary function regardless of its applicability. This assessment enabled the green building criteria to be ranked according to their overall NCP potential. Finally, the results of the first and second phase were synthesised into an overview of European banks' NCP readiness in real estate finance.

Overall, the results indicate a lack of net positivity orientation. The analysis of the GFFs revealed that European frameworks are highly standardised around a core set of categories largely aligned with the EU Taxonomy: green buildings, renewable energy and energy efficiency. Additionally, several banks include categories for transport, water, pollution control and increasingly circular economy (CE) and biodiversity (especially Nordic banks). Large continental and Southern European banks integrate both green and social categories within sustainability frameworks. While several banks talk about aiming for “a positive impact” on the environment, terms such as “handprint” and “net-positive”, appear only in a few frameworks in a general or nature-related context.

About half of the banks, 15 out of 33, include CCUS solutions as part of eligibility criteria for energy and electricity projects. They are, however, not connected to green buildings. The results show no clear relationship between banks' home countries and the inclusion of CCUS solutions in their frameworks, but banks operating in limited markets tend to include explicit CCUS criteria for energy-related projects more frequently (10 out of 15) than banks operating on a pan-European or global level (5 out of 15). Carbon removal or (net) negative emissions, technologies or footprints are not mentioned in any green eligibility criteria. Eight banks explicitly mention sequestration, with one bank talking about “net carbon sequestration”. However, sequestration is mostly included in Forestry or Afforestation categories, or in the contexts of natural resources and land-use or pollution control, with no links to green buildings. The remaining keywords appear rarely, if at all, and only in general contexts.

By contrast, 31 of 33 banks explicitly use emission or GHG-reduction language, either as impact indicators, eligibility criteria or strategy statements. Emission reduction orientation is prevalent in the green building criteria of 26 banks, including phrasing like “avoided emissions”, “GHG emission reduction” and “energy efficiency”. Carbon neutrality and net-zero language such as “supporting the transition low-carbon economy” appear in roughly two-thirds of frameworks, but these phrases are mostly connected to banks' general green targets and strategies, reflecting the strategic understanding of the topic, while not yet incorporated into operational property loan practices.

The second phase entailed a detailed review of each bank's green building criteria. The review confirmed that the EU Taxonomy (climate change mitigation objective, CCM) is the main standard used by banks in Europe, including the UK: 32 out of 33 explicitly name the EU Taxonomy as the key framework on which the green lending criteria are based on, with the remaining single bank also applying Taxonomy-aligned indicators. Most banks (30/33) also refer to the International Capital Market Association's (ICMA) Green Bond or Loan Principles, but the ICMA guidelines only steer the general GFF structuring and logic. While the Taxonomy's green building definitions are universally adopted by the reviewed banks, they seem to take some liberty in interpreting these criteria, with varying requirements for Taxonomy compliance. Some banks require full Taxonomy alignment, including the Do No Significant Harm (DNSH) criteria, whereas others demand only compliance with the substantial contribution (SC) criteria for CCM. Alternatively, some GFFs adopt only parts of the Taxonomy's SC criteria. For example, for green loan eligible renovations, some banks only require a 30% improvement of the primary energy demand (PED), whilst the Taxonomy primarily relies on the definition of a “major renovation” as per the EU's Energy Performance of Buildings Directive (EPBD).

Many banks also provide additional or alternative ways for green loan eligibility. A significant majority of the banks, 21 out of 33, accept GBRS as proxies if other data are not available. In a few cases, commercial certificates are required in addition to other credentials. The most common GBRS are BREEAM, LEED and the German Green Building Council's certification, DGNB (Deutsche Gesellschaft für Nachhaltiges Bauen). One bank also uses the Climate Bonds Initiative's (CBI) standard for defining threshold values for CO2 emissions. Single banks require compliance with or exceeding of country-specific standards or policies, such as UK Building Regulations, NextGeneration benchmarking system (UK) or Eco Prêt à Taux Zéro renovation measures (FR). However, no bank uses the country-specific standards as the sole green eligibility criteria but rather for complementing the Taxonomy-derived requirements. Hence, as the Taxonomy appears as the single most adopted framework across Europe, it is used as the basis for the later analysis.

From the Taxonomy-perspective, the GFF requirements for green buildings can be divided into three, almost equal-sized groups: full Taxonomy alignment (10 banks), simplified Taxonomy alignment (10 banks) and mixed requirements (13 banks) which combine Taxonomy criteria, national schemes and international GBRS. In the first group, Germany-based banks are over-represented (4 out of 10). Additionally, majority of the first group operate only nationally, including Germany, Spain, Italy, Poland and Sweden. Notably, this group mostly excludes GBRS in their requirements, prioritising the Taxonomy. The second group, “simplified Taxonomy”, has a large representation of Nordic- and Netherlands-based banks. Most of these banks operate in limited European markets, either nationally (Netherlands, Denmark) or regionally (Nordics, Baltics). In contrast, the third, “mixed” group has a higher share of banks operating on a pan-European or even global level, with headquarters across Europe (e.g. UK, Austria, Spain). They are more inclined to include internationally recognised certifications in their requirements, instead of relying on mere Taxonomy definitions. Overall, France- and Sweden-based banks seem most Taxonomy-oriented (none of these in the “mixed” group), whereas all UK-based banks are in the “mixed” group. Comparing the three groups with the keyword results reveals no clear correlations between Taxonomy orientation and net-positivity approach. While the “mixed” group shows a slightly higher number of GFFs without net-positivity-related keywords, the most Taxonomy-oriented group ranks second in this respect. Conversely, highly Taxonomy-aligned GFFs do not exhibit a greater presence of net positivity keywords.

After the review of the green building criteria and standards, the theoretical NCP potential of the criteria was assessed as described in Section 3. As the Taxonomy's CCM objective proved to be the main standard for the GFFs, the assessment of the NCP potential was carried out using the applicable SC and DNSH criteria. GBRS requirements were excluded from the analysis, as the mere level of certification without specifications of the content was considered too speculative. The analysis revealed that the current Taxonomy criteria provide some potential for applying NCP solutions, with the most significant potential pertaining to the construction of new buildings. Construction activities could accommodate the use of many bio-based construction materials and components, carbonised or CO2-cured concrete, and even promote urban forests and soils in larger construction projects. The results also demonstrate that the requirement for full Taxonomy alignment can improve the NCP impact for most Taxonomy eligible real estate activities. Compliance with the activity-specific DNSH criteria provides opportunities for implementing carbon-positive technologies which would not be applicable solely for the SC criteria. For example, installing and maintaining energy efficiency equipment, EV charging stations, energy performance monitoring devices or renewable energy technologies could not employ CSS solutions in the primary function of the activity. Yet, the potential for advancing NCP can be significantly increased by applying CSS technologies for the DNSH criteria.

Of the DNSH criteria, the climate change adaptation (CCA) activity may impact the carbon handprint the most, as they are required for all Taxonomy-eligible real estate activities. Apart from air-conditioning with DAC, CCA solutions could apply all CSS technologies. The Taxonomy criteria for CCA explicitly mention nature-based solutions as the favoured option (EU/2021/2139), making them well-aligned with the NCP approach. For the other DNSH criteria – water (WTR), CE, pollution (POL) and biodiversity (BIO) – the applicability of the nine NCP technologies is more indirect. Table 4 provides a ranking of the green building criteria, i.e. Taxonomy criteria used in GFFs, based on the analysis results.

In response to the first research question, “How do banks in Europe address the need for net carbon positivity in real estate finance?”, the evidence for progressive, net-positive approaches in European green property lending seems weak. Despite their net-zero claims, banks are still highly GHG emission reduction oriented. Although this does not necessarily exclude the adoption of NCP solutions, the findings imply a lack of understanding of the need for net-positive actions. Location and market presence of the banks seem to have little correlation with the general scope of the GFFs, with the typical energy-related categories – green buildings, energy efficiency and renewable energy – dominating banks' green lending (Park and Kim, 2020). However, Nordic banks tend to include newer topics like biodiversity and CE more frequently, potentially reflecting the Nordics' advanced policies in environmental sustainability and the economic materiality of natural capital. By contrast, continental and Southern European banks more often embed social sustainability in their frameworks, suggesting a greater role for financial institutions in supporting social outcomes. Given the comprehensive coverage of social sustainability in Nordic welfare systems, Nordic banks may place less emphasis on these issues in lending.

Interestingly, an example from another industry shows that banks can be progressive in green lending practices; Although CCUS is not yet widely established in the energy sector due to technical and financial barriers (IEA, 2025), several GFFs already incorporate it into the energy categories. This likely reflects the energy sector's key role in the green transition and its cross-sectoral impact (Ge et al., 2026) which has driven consistent policy and market pressure to shift from “brown” to “green”. Yet, the results show no clear relationship between banks' home countries and the inclusion of CCUS solutions in their frameworks. This could reflect the well-known fact that the banking sector is one of the most heavily regulated industries in Europe, primarily mandated to ensure the stability of the financial system (Dikau and Volz, 2021; Park and Kim, 2020). At the same time, it may “standardise” advanced CCUS metrics out of the loan conditions. However, nationally and regionally operating banks have more explicit CCUS requirements in their energy categories, implying that banks with specialised local understanding can be more specific in their criteria compared to banks serving wider European or global clientele. A smaller market might also allow higher flexibility for adapting new ideas to the banking processes. In contrast, CCUS solutions are non-existent in the green buildings criteria. Their absence in the EU Taxonomy – on which the criteria are mostly based on – might be explained by the unique aspects of real estate hindering fast change: fragmentation and asset heterogeneity, high dependency on debt financing and complexity of valuation. Furthermore, decarbonisation of buildings requires multiple simultaneous interventions (ETC, 2025), whereas the substitution logic is simpler in the energy sector. Despite these sectoral differences, integrating emerging energy solutions signals banks' readiness to adapt when policy and market pressures align.

Reflecting on the second research question “What is the readiness of banks to adopt net carbon positivity or “carbon handprint” in their green property loan criteria?”, the findings indicate that, first, banks' NCP orientation is highly dependent on the EU Taxonomy in Europe. Banks with limited regional focus tend to require full Taxonomy compliance, likely due to more uniform market-level interpretations that support applying the full criteria set. In contrast, pan-European and global banks display highest flexibility in green building requirements to accommodate international clients' needs. Still – importantly – the Taxonomy is referred to in all GFFs, confirming its global relevance in real estate financing. Interestingly, France- and Sweden-based banks seem most Taxonomy-oriented. This might be explained by their strong regulatory and national contexts for sustainability (Andersen and Berndtson, 2022; Park and Kim, 2020; Scarsella, 2024) and mature green capital markets (Eurostat, 2023). In contrast, all UK-based banks rely heavily on GBRS and apply the Taxonomy more flexibly, which is unsurprising given that they are not formally required to comply with the EU Taxonomy. Yet, they still use Taxonomy definitions – either explicitly or implicitly – likely because many of their clients operate within the EU.

Second, the results suggest that the Taxonomy's full CCM criteria (SC and DNSH) can theoretically capture NCP solutions. The impact potential is highest for material-intensive construction activities which could apply many long-term carbon-storing CSS technologies. Larger projects with substantial site works could also apply urban greeneries and biochar-enhanced soils. Among the DNSH criteria, CCA has the biggest impact potential as it is a precondition for Taxonomy alignment across real estate activities and can leverage multiple CSS technologies. Although the Taxonomy does not fully capture integrated environmental value (Papari et al., 2024), implementing technologies such as biochar in landscaping or urban soils could benefit other environmental goals like biodiversity protection and pollution prevention (Atkinson et al., 2010). Similarly, bio-based materials and composites offer co-benefits such as lower toxicity and greater potential for reuse (Yadav and Agarwal, 2021). Incorporating the Taxonomy's CE SC criteria into GFFs could strengthen their NCP potential, given their focus on material use (EU/2023/2486) and the recycling and reuse benefits of CSS solutions (Malabi Eberhardt et al., 2024).

At the same time, the results indicate that banks strive for simplicity in their green frameworks which is understandable in light of their heavy reporting burden (Kirschenmann, 2022). Most GFFs contain requirements that – while often derived from the Taxonomy – either only include selected parts of the Taxonomy criteria or allow proxies proving a certain level of environmental performance. Mostly, the GFFs demand high energy performance, validated through EPCs or other certifications. The results show no correlation between strict Taxonomy alignment requirements and NCP keywords, confirming the observation that the Taxonomy does not support NCP orientation in the buildings sector. Consequently, the findings highlight a paradox in bank-led green real estate financing: Banks as the key financier for real estate investments play an important role in funding activities with positive impacts (Park and Kim, 2020), necessitating the inclusion of ambitious, NCP-oriented metrics in the lending requirements. Yet, lenders are limited by inadequate incentives and policies (Holopainen et al., 2025), hindering incorporation of advanced environmental metrics (OECD, 2022).

Based on the findings of this study, a possible solution would be to expand the already widely applied and standardised Taxonomy criteria to explicitly cover NCP solutions rather than developing new ones. This would be particularly effective for national and regional banks that solely rely on the Taxonomy. According to Papari et al. (2024), the Taxonomy is most effective in financing novel sustainability activities where these activities are explicitly included in the Taxonomy criteria and there is already existing private investment interest. At the same time, emerging EU regulations on the certification of carbon removal and storage (EC and Viegand Maagøe AS, 2025; EU/2026/285) signal a growing policy focus on standardising net carbon removal and supporting the uptake of related technologies. Although these regulations do not directly target financial institutions, they may nonetheless pave the way for integrating new carbon-related metrics into green financing practices, especially when backed up by central banks and financial regulators (Park and Kim, 2020). GBRS could add “extra” assurance for advancing the NCP, but due to their complexity the impact might be more challenging to estimate (Michl et al., 2016; OECD, 2022), necessitating higher transparency on the certification content.

This study makes a theoretical contribution to existing research on net-positive buildings, climate policy and green finance in multiple ways. First, it provides a refined, literature-backed definition of “net carbon positivity” (Table 2) and applies it in an empirical context. Second, by integrating theoretical and empirical evidence, the study demonstrates that interpretations of “beyond net zero” in the buildings sector remain comparatively conservative and less ambitious than those found in some other sectors, such as the energy sector. Subsequently, the findings suggest potential areas in which to expand green property lending criteria, responding to the problem of insufficient green metrics and finance frameworks identified by researchers (e.g. Kirschenmann, 2022; Park and Kim, 2020). Finally, the study contributes to the growing body of EU Taxonomy literature (see, e.g. Brabec and Macháč, 2026) by critically examining its environmental impact from the net positivity angle.

For practitioners seeking to move beyond conventional net-zero approaches, this study offers several insights. First, new construction plays a pivotal role in advancing net-positive outcomes, as large-scale developments offer the greatest NCP potential through material choices and site-level interventions. Second, the study identifies specific, Taxonomy-based green building criteria within current financing frameworks that could embed NCP solutions. While not designed to reward net positivity, the existing criteria can act as transitional mechanisms towards more ambitious performance. As indicated by the findings, this mechanism might be most effective in markets dominated by national or regional banks that adopt the Taxonomy more strictly than international banks. However, realising this transition potential requires a supportive regulatory and investment environment (Papari et al., 2024), bearing important policy implications; Although the EU Taxonomy has conceptual potential to accommodate NCP approaches, stronger steering would require more explicit provisions in the Taxonomy Delegated Acts (EU/2021/2139; EU/2023/2486) and related disclosure legislation, such as the Sustainable Finance Disclosure Regulation (SFDR). Incorporating definitions from the EU's new carbon removal and storage certification framework (EU/2026/285) into the Taxonomy criteria would be an important first step towards this goal. The evidence of Iliescu et al. (2026) further suggests that assigning monetary value to environmental externalities can promote the use of carbon-storing materials such as timber. Accordingly, policymakers and central banks should reinforce this transition by demanding lenders to incorporate externalities in property valuation, loan underwriting and sustainability-linked lending criteria.

As one of the first studies to integrate green real estate finance with net carbon positivity, this research has certain limitations. The study adopts a high-level conceptual perspective on the applicability of NCP solutions in real estate, without quantifying the carbon impacts of individual technologies or their temporal effects. The actual net carbon impact depends on multiple project-specific factors and should be assessed using comprehensive carbon footprint calculations to improve transparency and reduce the risk of greenwashing (Kühnen et al., 2019; Malabi Eberhardt et al., 2024). Additionally, by focusing on the environmental impacts of NCP solutions, this study does not examine their financial or practical feasibility. Future research should address these aspects, particularly considering the criticism surrounding NETs (Anderson and Peters, 2016). Furthermore, although the EU Taxonomy provides a justified starting point, green real estate finance research and the wider international property sector would benefit from evaluating the carbon handprint potential of established GBRS, such as BREEAM and LEED, alongside national building regulations.

While qualitative content analysis is well-suited to the research objective, it is limited to examining publicly disclosed GFFs rather than their implementation in lending practices or portfolio allocations. Consequently, the findings should be interpreted as reflecting the environmental priorities that banks communicate to investors and other stakeholders, rather than actual internal lending decisions. Likewise, the absence of a concept – such as net carbon positivity – from a framework should not be interpreted as conclusive evidence that it is not considered internally. Future research could complement documentary analysis with interviews or case studies to examine how publicly disclosed criteria are translated into lending decisions and financing outcomes.

The study aimed to uncover European banks' approaches to net carbon positivity and the extent to which green building criteria accommodate “carbon handprint”. In conclusion, the results show that banks strive for simplicity in their green frameworks, relying on the EU Taxonomy definitions which do not explicitly address NCP. Most GFFs either only include selected parts of the Taxonomy criteria or allow proxies that prove a certain level of environmental performance. They are also strongly focused on high energy performance, validated through EPCs or other certifications. The underlying standards in current real estate finance in Europe – essentially, the Taxonomy – could, however, be expanded to cover CSS approaches, providing opportunities for more effective decarbonisation of the buildings sector. The net positivity potential is biggest for large construction projects which employ solutions for CCA. These changes require, however, strong regulatory and central bank mandates and would need to be tied to the assets' financial value to be effective.

Overall, these findings suggest that green lending policies – while currently centred on harm reduction and energy performance – could play a pivotal role in advancing the “beyond net zero” agenda in the built environment. A global benchmark like the EU Taxonomy could be especially effective in cultivating a shift from incremental “green” improvements towards net-positive outcomes with explicit, and standardised net positivity criteria applicable across markets. NCP-oriented lending frameworks would not only improve the transparency and credibility of sustainable finance, reducing opportunities for greenwashing, but also generate wider societal benefits as funding would be directed at projects genuinely supporting climate change mitigation and adaptation and enhancing the resilience of living environments. Consequently, as one of the world's largest recipients of debt finance, the buildings sector could move beyond a reactive role in climate change mitigation to become an active driver of climate-positive change.