The future of green securitisations in the European Union

This contribution examines the future trajectory of green securitisations within the European Union, exploring their evolving role in advancing sustainable finance. It begins by situating green securitisations at the nexus of environmental policy and capital markets, highlighting their capacity to mobilise private capital for climate-friendly projects such as renewable energy and energy-efficient buildings. The article contextualises the EU’s ambition to foster deep and liquid green securitisation markets as part of its broader sustainable finance agenda, specifically linking these efforts to the Savings and Investment Union and the Capital Markets Recovery Package. Recent legislative developments, including the EU Green Bond Regulation and proposed revisions to the Securitisation Regulation, are discussed as both opportunities and limitations for the sector’s growth. The contribution sets out to clarify the definition and scope of ‘green securitisation’, distinguishing between activity-based and target-based models, and considering nuanced approaches to asset selection—either by including positively labelled green assets or excluding those detrimental to sustainability. It draws on Agostini’s model for classifying sustainable securitisations, providing a framework for understanding the practical and regulatory challenges ahead. The analysis assumes that readers are familiar with basic securitisation structures. The hesitancy in the initial development of EU green securitisation markets is explored, identifying both policy support and regulatory gaps. The contribution ultimately seeks to identify constraints and opportunities for advancing an EU green securitisation market and concludes with critical observations on the path forward for integrating green securitisations into Europe’s sustainable finance architecture.