• This article examines the alternatives available in capital markets for structuring sustainable investment strategies amid the growing saturation of green bonds.
• This information is intended for asset managers looking to invest with ESG criteria in mind.
• FlexFunds offers an asset securitization program that enables the structuring and issuance of customized ETPs linked to sustainable investment strategies. For more information, please do not hesitate to contact our experts.

Sustainability has taken hold of capital markets in force, driving record issuance of green bonds. For this reason, in 2025 alone, the size of this market reached a record USD 3 trillion.

However, a significant portion of these instruments is used to refinance projects that have already been completed, with limited impact on new environmental assets. In addition, their issuance involves high certification and ESG reporting costs that can offset their financial benefits.

As a result, fund managers are increasingly exploring new structures to channel sustainable investment, such as ETPs.

Why are green bonds no longer enough?

Despite their popularity, green bonds have intrinsic limitations. In many cases, they are used to refinance past projects, meaning they have a limited impact on financing new environmental investment.

Likewise, the “green” validation process involves additional costs for the issuer (certification costs, environmental reports, etc.) that tend to be high, adding a significant reputational component aimed at attracting ESG investment.

On the other hand, although the total volume is significant, green bonds are still a fraction of the fixed-income market: According to Moody’s, their expansion will be limited by regulatory fragmentation and anti-greenwashing pressure.

Taken together, these factors mean that relying exclusively on green bonds is not enough to finance the sustainable transition.

New sustainable financing vehicles beyond green bonds

Given these limitations, alternative financing structures have emerged. Beyond the classic social or transition bonds and Sustainability-Linked Bonds (SLBs), which tie interest rates to meeting ESG targets, managers are developing listed vehicles and tailor-made structures to channel long-term investments.

In particular, exchange-traded products (ETPs) and special purpose vehicles (SPVs) make it possible to repack various sustainable investments into tradable securities.

In FlexFunds’ case, an international provider of administration services for investment vehicles (ETPs), we propose models based on SPVs. These structures make it possible to repack investment strategies in a flexible, scalable way that is ready for international distribution.

Customized structures and thematic focus

Listed SPVs offer full structural flexibility. They can be designed as debt, equity, or hybrid vehicles depending on the investment objective.

This makes it possible, for example, to directly finance the construction and operation of a renewable project by issuing SPV equity (rather than only debt), or to structure a hybrid that combines fixed income with a share of future revenues.

These entities also offer limited liability: The vehicle limits exposure to the capital allocated. Managers can therefore create tailor-made thematic “baskets”: indices or portfolios focused on solar energy, green hydrogen, water efficiency, ecological restoration, and more.

Use cases: energy transition, infrastructure, biodiversity

The energy transition and green infrastructure are clear examples where sophisticated structures are required.

Projects such as wind farms, solar parks, or biogas plants require large, long-term investments. Diego Palencia, VP of Research and Strategy at Solidus Capital Banca de Inversión, cited by La República, notes that these initiatives “require far more sophisticated financing mechanisms” than a traditional bond, even requiring their sponsors to include sustainable issuances in their capital structure.

An SPV can pool multiple renewable assets (or their associated cash flows) and list them on an exchange to facilitate access to global financing.

Similarly, green infrastructure (electric public transport, sustainable water systems, efficient buildings, etc.) can be packaged into listed vehicles distributed through regulated markets.

By listing on authorized markets, these ETPs facilitate access to institutional investment for projects that are traditionally illiquid.

Sustainable ETPs vs. green bonds: efficiency and global reach

Sustainable ETPs combine the operational advantages of listed products to improve ESG financing:

• Superior operational ease: They trade intraday like stocks, with high liquidity and real-time execution, something unthinkable for unlisted vehicles.
• Lower operating costs: This improves the manager’s margins and lowers investment friction. This low-fee, high-liquidity environment allows portfolios to be rebalanced instantly and risks to be hedged with specific assets (Treasury bonds or precious metals, for example) without delay.
• Transparency: An ETP’s holdings are typically disclosed daily, and its activity is recorded on the leading information platforms. This makes ESG oversight easier, since managers and regulators can monitor the vehicle’s composition at all times.

Institutional access and international distribution

ETPs offer global reach from day one. Once listed on financial markets, they can be traded on multiple exchanges and held with international custodians such as Euroclear.

This enables immediate access to private banks and international funds without the geographic limitations of a private market. At the same time, their presence on Bloomberg, SIX, or Morningstar terminals increases visibility among institutional managers.

How FlexFunds facilitates the structuring of sustainable assets

In this new landscape, FlexFunds positions itself as a technology partner to bring listed sustainable vehicles to life.

This process includes supporting asset managers throughout the entire process of creating and launching efficient, customized ETPs.

For example, the FlexPortfolio solution makes it possible to convert an investment strategy into a listed ETP more efficiently than launching a traditional fund.

The product includes advisory services for setting up the SPV (in Ireland, taking advantage of tax benefits), as well as administrative and regulatory management for listing on an exchange.

Another key service is FlexFeeder, which makes it possible to structure private fund interests into “Euroclearable” listed securities.

This way, a private equity fund can expand its global distribution by becoming a tradable instrument.

To learn more about FlexFunds’ products, please do not hesitate to contact our executives. We will be glad to assist you!

Sources:

• https://www.lseg.com/en/insights/green-debt-market-passes-3-trillion-milestone
• https://www.larepublica.co/responsabilidad-social/mercado-de-los-bonos-sostenibles-alcanzara-us-1-billon-este-ano-segun-proyecciones-4062306
• https://agendapublica.es/noticia/17997/transicion-ecologica-no-se-pagara-con-bonos-verdes
• https://www.bbvaassetmanagement.com/es/actualidad/mas-alla-de-los-bonos-verdes/
• https://www.fundssociety.com/en/news/etf/spvs-as-catalysts-for-liquidity-and-global-distribution/
• https://www.fundssociety.com/en/news/etf/6-advantages-of-etps-that-make-them-key-allies-amid-uncertainty/