Brussels, 1 March 2023
The Commission welcomes the political agreement reached yesterday between the European Parliament and the Council on the Commission’s proposal for a European Green Bond Regulation.
This Regulation, which is an integral part of the European Green Deal, will establish an EU voluntary high-quality standard for green bonds. The European green bond standard (EUGBS) will be available to companies and public entities that wish to raise funds on capital markets to finance their green investments, while meeting tough sustainability requirements. In particular, issuers of EUGBS would need to ensure that at least 85% of the funds raised by the bond are allocated to economic activities that align with the Taxonomy Regulation. This will allow investors to more easily assess, compare and trust that their investments are sustainable, thereby reducing the risks posed by greenwashing.
Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said:
“Led by Europe and European issuers, the green bond market is growing into an important source of funding for companies that need to fund large-scale climate-friendly investments, such as renewable energy, clean transportation, and energy-efficient buildings. With the European Green Bond Standard, we are creating a new gold standard available to those companies that want to be at the forefront of the sustainability transition.”
As a result of the agreement, the Commission will also publish EU templates for issuers of other bonds with environmental objectives, even if they do not make use of the EUGBS. The use of these templates will be strictly voluntary. For the first time, there will be a standardised template that issuers can use to report information on the Taxonomy-alignment of green bonds, thereby reducing administrative burdens and uncertainty both for green bond issuers and for their investors.
The Regulation also creates a regime for the registration and supervision of external reviewers. External reviewers play an important role in the market by assessing green bonds in detail and providing confirmation to investors about their environmental credentials. Issuers making use of the new EUGBS will be required to employ such external reviewers at several points during the bond’s life-cycle, including to check the alignment of the funded projects with the Taxonomy Regulation.
Source – EU Commission