Banca d’Italia puts forward a proposal for a simplified EU definition of green loans

In October 2026, Banca d’Italia published issue number 52 of its Notes on Financial Stability and Supervision, which addressed the simplification of the EU definition of green loans

The paper, written by Valeria Lionetti, Tommaso Loizzo, Ludovico Ridi and Federico Schimperna, that the lack of a harmonized and operational definition of what constitutes a green loan is a significant obstacle to the expansion of green lending and to the collection of consistent evidence on its risk profile.

The authors propose the harmonisation of the “green loan” definition, keeping the EU Taxonomy as the anchor, while adding a simplified, performance-based pathway for loan financing construction and real estate activities. Such a definition could support the orderly development of the market and help improve the energy efficiency of buildings, reduce households’ expenditure and strengthen their resilience to energy price shocks.

ENGAGE for ESG welcomes the Banca d’Italia proposal. In particular, the relaxation of the EU definition is aligned with the purpose of the ENGAGE for ESG initiative. The ENGAGE Templates, developed as an extension of the ESMA Annexes 2 and 6 under the EU Securitisation Regulation 2012/2017, aim exactly at supporting financial institutions comply with the EU Taxonomy disclosure requirements for residential mortgages and home loan renovations in a simple and streamlined manner.

The limited additional sustainability information requested by the ENGAGE Templates -on a voluntary basis- is summarised in an EU Taxonomy alignment report which effectively represents a third-party opinion for financial institutions. The detailed, granular nature of the dataset -requested at collateral level- also aims to tackle greenwashing.

The ENGAGE Template and Portal are jointly an effective tool to monitor and improve ESG data quality over time. The ENGAGE Templates are transaction-agnostic, as they can be used for pool of loans, RMBS transactions or covered bonds without restriction.

The ENGAGE Templates and Portal form a powerful ecosystem that is well-suited to cooperate with other European, national and regional initiatives to promote the renovation wave of the residential housing stock, allowing financial institutions and borrowers to manage the risks of climate change and to reduce energy poverty.

Click below to access the full note.