Green securitization

A green securitization is a securitization whose collateral or cash flows are related to environmental activities.

The category includes three types of securities:
1. those backed by green assets.
2. those backed by a pool of green loans.
3. those placed to finance green projects.

A securitization backed by green assets is a classic ABS (asset-backed security), the assets of which are used for environmentally friendly production. Examples of this can include wind and solar power generation and electric vehicle production.

Securitizations backed by a pool of green loans can be both ABS and MBS (mortgage-backed security) since this group of loans includes any targeted loans issued for the development of green initiatives. Examples include mortgage loans for the construction of energy-efficient houses and loans issued to enterprises for the implementation of environmentally friendly projects.

A securitization placed to raise funds for a green project is essentially no different from an ordinary green bond, since the determining criterion is the purpose of the placement: if they meet the principles of ESG, the securitization is green.