News on the EU Green Bond Standard

February ends with a bang for the sustainable finance market – the chief negotiators of the European Parliament and the Council of the EU have reached a preliminary agreement on the EU Green Bond Standard.

According to the EU’s (correct) view, sustainable bonds are one of the most important instruments for financing investments in green technologies, energy efficiency and resource efficiency as well as in sustainable transport and research infrastructures. Therefore, the EU Green Bond Standard is to be implemented as a regulation and is supposed to contribute to more transparency. By linking to the EU Taxonomy Regulation, issuers will in future be able to prove that they are investing in sustainable economic activities. By contrast, investors will be able to compare sustainable financial products and assess whether they are actually pursuing the (sustainability) objective they desire. The risk of “greenwashing” can thus be significantly reduced.

The final version is not yet available – the following is currently known:

• The funds raised may only be invested in sustainable economic activities in accordance with the EU Taxonomy Regulation (earmarking), provided that the sectors concerned are already covered by the EU Taxonomy Regulation. For sectors not yet covered, a flexibility reserve is to be introduced so that the EU Green Bond Standard can be used from the very beginning, and thus even before the sectors are implemented.
• Compliance with the EU Green Bond Standard, in particular the resulting earmarking, is to be ensured by a registration system and an external audit. Furthermore, supervision by member state institutions is to be introduced.

In the next step, the EU Green Bond Standard preliminary agreement must now be adopted by the Council and the European Parliament. It is to enter into force no later than 12 months later.

If you have any further questions, please do not hesitate to contact Christoph Harringer.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.

 

1. March 2023

 

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