The EU Commission has presented the eagerly awaited draft regulation for the EU Green Bond (EuGB) Standard as part of its Sustainable Finance Strategy. The EU Green Bond (EuGB) Standard will also be open to issuers of green bonds outside the EU.
The proposed draft contains four main requirements:
- The funds raised by the bond should be fully used for projects that comply with the taxonomy or help to align an economic activity with the EU taxonomy in the long term ("use-of-proceeds").
- There must be full transparency on how bond proceeds are allocated through detailed reporting requirements.
- All green bonds under the EuGB standard must be audited by an external auditor. This is to ensure that the regulation is complied with and that the projects financed are in line with the taxonomy. Special but limited flexibility is provided here for sovereign issuers.
- External auditors providing services to issuers in accordance with the EuGB standard must be registered with and supervised by the European Securities and Markets Authority (ESMA). This is to ensure the quality and reliability of their services and audits in order to protect investors and ensure market integrity. Again, special, limited flexibility is provided for sovereign issuers.
The draft provides for a voluntary "gold standard". In this respect, one can continue to assume a coexistence of different ESG or green labels. However, those who want to use the EuGB standard for their issues must meet demanding and uniform requirements. A uniform approach for all bond issues such as government bonds, covered bonds, corporate bonds and securitisations is to be welcomed, as is the use-of-proceeds approach: this means that the focus is directed more towards the financing of companies and economic activities towards sustainable transformation instead of exclusively on already existing green assets.
Further information:
to the press release of the EU
on the draft law
to the annexes of the draft law
