A steady flow of ESG financing through mechanisms like green securitisations is needed to successfully decarbonise UK property.
Investor interest in green securitisations has been growing over recent years as ESG investments become more and more desirable. But, there are still substantial challenges facing the market for green securitisation – including the need for better property data.
The first step? Discussion and debate with industry experts.
That’s why we hosted a panel event on the topic of green securitisation, with expert speakers from across the finance industry:
- Alexander Batchvarov, Managing Director at Bank of America
- Maria Green, Knowledge Counsel in Securitisation at Allen & Overy
- Peter Winning, Director of Asset-backed Securities at BlackRock
- Emma Harvey-Smith, Chief of Staff at the Green Finance Institute
The panel was moderated by Orla Shields, co-founder and CEO of Kamma.
If you missed the event, don’t worry! Take a look at the recap video below, and keep reading for a summary of the key discussions.
Investors are looking for sustainable investments like green securitisations
It was clear from the discussion that there is already demand for sustainable investment opportunities amongst investors.
They’re looking for ESG investing opportunities that offer lower risk and which contribute to decarbonisation, whilst still needing to guarantee capital returns.
”Demand is there from the investor side. I expect that there will be more green loans created over time, as the underlying mortgage borrowers realise that being green actually saves on their heating.” – Peter Winning, Director of Asset-backed Securities at BlackRock
More green assets are needed for a successful green securitisation market
Whilst investor demand for sustainable investments like green securitisations are there, the supply side is lacking.
Green securitisations are still few and far between and that’s partly due to a lack of green assets to securitise – particularly mortgages on energy efficient homes.
The panel was clear that when the market for home retrofit takes off and more energy efficient homes exist, the green securitisation market will accelerate too.
“We need to build that demand, build the portfolio and then the securitisations can follow.” – Emma Harvey-Smith, Programme Director, Built Environment, Green Finance Institute
Better, transparent property data is needed for a successful green securitisation market
A second challenge facing the growth of green securitisations is property data.
As it stands, environmental profiling data for the UK property market is disparate, incomplete, and inaccurate – leaving a lack of transparency when it comes to qualifying green assets and verifying green investment opportunities.
“We need data. We cannot evaluate ESG or any aspect of a product [without data], whether that is a mortgage, the securitisation of mortgage, a mortgage covered bond, or the balance sheet of a mortgage bank.’’ – Alexander Batchvarov, Head of International Structured Finance Research, Bank of America Global Research
This needs to change if green securitisations are to make a meaningful contribution to property decarbonisation in the UK. This is also where Kamma comes in, offering a trusted single source of truth for UK environmental property data.
“How do you rate those assets? How do you rate that collateral? How do you get confidence around it in order to wrap a securitisation or a product around it in order to drive the right change? And we only solve that problem with data.” – Matt Bullivant, Director of Sustainability & ESG Strategy at OakNorth Bank
🏠 White paper: Green securitisations: Kickstarting a green lending revolution
Looking for more insights on the potential of green securitisations? We mapped the market opportunity in terms of financial returns and property decarbonisation in our white paper on the topic.}
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