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Definition

Green securitisation

Green securitisation uses securities backed by pooled cash flows to finance or refinance eligible green assets, or allocates the proceeds to eligible green projects of the issuer, originator, or sponsor.

What is green securitisation?

Green securitisation pools debts or receivables, transfers them to a special-purpose entity, and issues securities repaid from the pool's cash flows. Under ICMA Green Bond Principles 2025 Appendix I, item 4, the green claim can rest on the projects securing the bond or on eligible green projects financed by the issuer, originator, or sponsor. It is a type of green bond; the pooled assets, transfer, and cash-flow structure distinguish it from a standard unsecured green use-of-proceeds bond.

Why does green securitisation matter to you?

Investors, arrangers, reviewers, and counsel test the asset schedule, eligibility criteria, legal transfer, cash-flow waterfall, credit enhancement, proceeds allocation, and impact records. If these files do not reconcile, the green label may overstate qualifying assets or spending and obscure the pool's credit risk.

How does green securitisation work?

The originator identifies receivables and transfers them to a special-purpose vehicle (SPV), a separate entity created for the transaction. The SPV issues classes of securities with different repayment priority. A servicer collects borrower payments and pays investors in the order set by the transaction documents. The framework must identify whether the transaction uses ICMA's secured green collateral method or secured green standard method and follow the four Green Bond Principles components.

What mistakes should you avoid?

  • Calling a mixed pool green without stating which assets qualify and which labelling method applies.
  • Counting one project under two outstanding green financings, contrary to ICMA Sustainable Securitisation Q&A 3.2.
  • Publishing an impact figure without pool identifiers, source data, calculation method, and allocation records.

Is green securitisation the same as a green bond?

No. It is a green bond structure with an asset pool, a transfer to a special-purpose entity, and repayment tied to pooled cash flows. Review both the green framework and the securitisation documents.

What records should you provide to investors?

Provide the dated pool file, eligibility mapping, transfer documents, outstanding balances, arrears, waterfall, credit enhancement, proceeds ledger, external review, impact method, and a confirmation that no eligible project is counted twice.

Example

Suppose an Indian equipment lessor leases 30 battery-electric delivery vans to one hypothetical retail chain. It transfers 30 equipment leasing receivables with INR 180 million outstanding to a special-purpose distinct entity, which issues INR 150 million of notes. Pool coverage is INR 180 million divided by INR 150 million = 120%. This is deal arithmetic, not a regulatory threshold.

For a secured green collateral label, the file must map all 30 leases to the published green criteria and retain the vehicle specifications, lease contracts, invoices, outstanding balances, and double-counting check. If the notes are listed in India, counsel must also test the transaction against the current SEBI securitised debt instrument rules, including regulation 2(1)(g)(iii) for equipment leasing receivables and regulations 10 and 10A.

Where it comes up

ICMA Green Bond Principles 2025 secured green bond methods for securitisationsICMA Green Bond Principles 2025, Appendix I, item 4(i)-(ii)Official sourceICMA sustainable securitisation double-counting and reporting controlsICMA Sustainable Securitisation Q&A 3.2 and 3.4Official sourceIndia listed SDI equipment leasing receivables, assignment, and quarterly reportingSEBI SDI Regulations, regulation 2(1)(g)(iii), regulations 10 and 10A, amended to 6 July 2026Official source

Related terms

Green Bonds

A green bond is a bond whose proceeds are reserved for eligible projects with environmental benefits; the label applies to the financing, not automatically to the issuer's whole business.

Climate Bonds Standard

The Climate Bonds Standard sets the eligibility, verification, proceeds-control, and reporting requirements for debt instruments, assets, and entities seeking Climate Bonds Certification.

Green loan

A green loan finances or refinances eligible environmental projects under deal-specific rules for project selection, proceeds tracking, allocation reporting, and impact reporting.

Greenwashing

Greenwashing is a false or misleading environmental message that makes a product, service, investment, or business appear more beneficial or less harmful to the environment than the evidence supports.

Sources

Last verified 2026-08-21

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Green securitisation Definition | Keslio