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ICMA Green Bond Principles vs. EU Green Bond Standard

Green bonds are financial instruments whose proceeds are used to finance sustainable investments. Currently, there are several voluntary green bond frameworks financial institutions can follow when issuing green bonds.

Two of the most widely accepted ones on the market are the International Capital Market Association (ICMA)’s Green Bond Principles (GBP) and EU Green Bond Standard (EUGBS). This article highlights the main differences between the two. The former was last updated in June 2022, while the latter is yet to be adopted by the legislators and currently under review in trilogues of the European Commission, the European Parliament and the Council.  


In terms of the alignment with the environmental goals, the ICMA GBP simply recommends it while the EU GBS requires the proceeds to be aligned with the EU Environmental Objectives. According to the ICMA GBP, the use of proceeds is recommended to be clearly displayed in legal documents, while under EU GBS, this is required. The eligibility criteria for the green projects are addressed only on high-level in ICMA’s standard. The standard, nevertheless, recommends the disclosure of alignment of the projects with taxonomies or any recognised green standards or certifications.


On the other hand, the EU GBS mandates alignment to the EU Taxonomy, hence the projects need to have substantial contribution to at least one of the environmental objectives; do no significant harm; have minimum social safeguards and undergo technical screening criteria. Grandfathering is another factor where the two standards differ. ICMA GBP displays no limit to it while EU GBS recognises it only up to 5 years. In terms of the timeframe to which financed projects need to comply with eligibility criteria, ICMA GBP recommends at issuance while EU GBS up to 5 years or 10 years if properly justified.


The impact monitoring and reporting, external review requirements and transparency of GB documentations are all recommended by ICMA GBP while required under EU GBP.  Lastly, the accreditation of external reviewers is another category where the standards differ. While the EU GBS asks for the external verifier to be part of a (voluntary interim) registration by ESMA, the ICMA GBP only recommends the verifier to have the necessary experience, professional indemnity and/or professional liability insurance.  

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