For environmentally sustainable bonds that are aligned with EU taxonomies and made available to investors worldwide, this regulation lays down uniform requirements for bond issuers to use the designation 'European green bond' or 'EuGB'. Part of this is a registration system and supervisory framework, which helps external reviewers in assessing if a bond is green. Equally important, the regulation requires proper identification, elimination, and disclosure of any actual or potential conflicts of interest.
Besides introducing voluntary disclosures for green bonds and sustainability-linked bonds in the EU, the standard prohibits greenwashing in the green bond market through its link to the EU taxonomy. Green bonds are among the most important tools for financing green technology, energy efficiency, resource efficiency, sustainable transport infrastructure, and research infrastructure. When marketing green bonds, companies are required to disclose much information about how the proceeds will be used, as well as how those investments are integrated into the company's overall transition plan. The provisional agreement requires all proceeds from EuGBs to be invested in economic activities aligned with the EU taxonomy, provided those sectors are already covered.
As a result of this agreement, 15% of the proceeds of a green bond can be invested in economic activities that are not yet covered by the EU taxonomy.
Under the new standard, competent national authorities of the member state will supervise issuers comply with their obligations. Before it becomes final, the agreement still needs to be approved by the Council and the European Parliament.
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RBI Regulatory Advisory
Raiffeisen Bank International AG | Member of RBI Group | Am Stadtpark 9, 1030 Vienna, Austria | Tel: +43 1 71707 - 5923