The accelerating shift toward sustainable finance requires investment strategies that combine financial performance with measurable environmental progress. Traditional green portfolios often achieve sustainability gains at the cost of benchmark deviation or reduced diversification (Friede et al. 2015). To address this, new quantitative approaches are needed to align financial market behaviour with the European Union’s green transition and climate neutrality goals.

This policy brief draws on the study "Tracking-Based Green Portfolio Optimisation'' by D. Barro, M. Corazza and G. Filograsso, to translate its analytical results into actionable insights for policymakers, financial institutions, and sustainability regulators. The research demonstrates how portfolio optimisation techniques can incorporate ESG and carbon data directly into investment decision processes, offering a scientifically grounded pathway to green financial products.