Green bonds are ordinary bonds whose issuance is related to environmental sustainability projects (such as energy efficiency, pollution prevention and control, sustainable land use).
The European Parliament has recently issued some changes to the green bonds (the EUGB Regulation), as follows:
- transparency requirements have been introduced for all green bonds, including alignment with taxonomy regulations;
- to prevent highly polluting companies from using EuGB label to pretend to adopt sustainable policies, the proposal requires verified transition plans. All issuers from countries on the EU’s gray or black lists of tax havens are prohibited from issuing EuGBs; and
- monitoring activities entrusted to external auditors have been introduced so as to ensure that the EUGB Regulation be complied with and the projects financed be in line with the requirements of the taxonomy. Strict transparency requirements have also been envisaged in order to ensure that, when a green bond issuer intends to allocate proceeds to nuclear energy or fossil gas activities, a statement must appear prominently on the front page of the EUGB Factsheet.
Proposal for a Regulation of the European Parliament and of the Council on European Green Bonds of 6 July 2021, No 2021/0191 (COD) and Report of the Committee on Economic and Monetary Affairs of 20 May 2022