Unlocking the Potential of Green Securitization

Green securitization contributes to increasing the depth of green bond markets and matches growing investment appetite from central banks and institutional investors. However, the underlying assets must be issued in sufficient quantity with a large pipeline to ensure deals offer liquidity, especially with green collateralized securitization. Key barriers to this development are the absence of standardized definitions, common risk assessment methodology, common cash flow models, and a lack of standardized green loan contracts. The EU Commission’s New Green Deal is a game changer and the commission itself expects the mobilization of €1tn in private and public sustainable investment over the decade.