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University of Miami International and Comparative Law Review

Abstract

Sustainable finance and green investments have grown from a trend to a dominant investment strategy throughout asset classes globally, and the EU is no exception. The EU published its Green New Deal and Sustainable Finance Strategy as roadmaps toward a more sustainable and equitable future. The twin reports contain comprehensive plans and initiatives to make sustainable finance more accessible through effective regulation. Stemming from those initiatives were various regulatory frameworks such as the EU Taxonomy, the Corporate Sustainability Reporting Directive, the Sustainable Finance Disclosure Regulation, and the EU Green Bond Standard. The regulations above are aimed at everything from public company disclosure requirements to a comprehensive categorization system for sustainable financial products in the case of the EU Taxonomy. Also relevant to this Note is the EU Securitization Regulation, which serves as a framework for securitized products, disclosures, reporting, and structuring. However, even in the presence of deliberate regulation, headwinds in the securitization market could dampen sustainable finance initiatives. For example, greenwashing, scaling risk, and a lack of uniform measurement are three issues that underscore the complexities and roadblocks of rolling out sustainable securitization more broadly. However, the existing regulatory backdrop, comprising sustainability regulations in financial services, could regulate many aspects of the securitization process, from identification of collateral, structuring transactions, originator and issuer disclosures, and investor protection. Moreover, the existing frameworks will need to be tailored towards securitization, public-private partnerships will need to be adopted, and ratings and oversight processes will need to be tailored towards green securitized products to encompass the securitization process’s complexities adequately.

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