Principles for developing a green securitisation market in Europe

Principles for developing a green securitisation market in Europe  

Mindy Hauman is PS Counsel in White & Case Capital Markets Group and a core member of their sustainable Finance team. She is also a co-author of the G20 Sustainable Finance Study Group’s White paper on the development of a sustainable CLO market to implement the Paris Agreement.

On 11 September 2019, AFME published a position paper outlining their thoughts on what they see as the four key factors in developing and growing the green securitisation market in Europe.

What does the recently published paper on green securitisation by AFME set out?

AFME’s position paper sets out four key pillars it sees as fundamental for jump starting and promoting the growth of the European green securitisation market:

  • a clear definition of what a green securitisation is—this will help with identifying green securitisations and encourage reporting
  • more regulatory structure and once that is established, it will allow for transparent financial incentives. AFME believes that the introduction of tax incentives, preferential regulatory capital treatment for green securitisations and government support by way of guarantees and subsidies could help promote the growth of the green securitisation market
  • in addition to a clear definition of what a green securitisation is, clear green eligibility criteria are also essential to promote transparency on the underlying collateral and to ensure investments are, and continue to be, sustainable. AFME believe that the proposed sustainable finance taxonomy will provide an important criteria based tool to ensure market consistency and clarity especially for green securitisations, and
  • future proof deal structures through continuous reporting and disclosure and build in grandfathering and mitigation mechanisms for longer dated transactions to mitigate any loss of green label due to changes in technology or change in criteria over time

Why has AFME published this paper?

In order to finance sustainable infrastructure projects at the pace and scale required to achieve the goals of the Paris Agreement an investment of US$100trn in sustainable infrastructure is required over the next 15 years to support the world’s move towards the sustainable economy envisaged by the Paris Agreement. According to the Intergovernmental Panel on Climate Change, a seven-fold incre

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About the author:

Meet Emma:

1.Banking and finance lawyer with experience in derivatives, debt capital markets, securitisation and structured finance in London and Paris

2.Likes ballet, playing the harp and holidays

3.Thinks the law is always changing!

Emma trained and qualified at Allen & Overy LLP and worked in their derivatives and structured finance teams in London and Paris.  She then joined the foreign exchange prime brokerage legal team at Deutsche Bank before spending 4 ½ years with Crédit Agricole CIB advising the fixed income and derivatives desk.