Trilogue discussions are beginning between the co-legislators to determine a final text for the Regulation on European green bonds.
We
strongly support the progress towards a consensus on a voluntary
standard, as well as potentially on grandfathering of Technical
Screening Criteria of the Taxonomy for the EuGB label.
However,
we have real concerns for the success of the EuGB label if proposals for
fundamental changes to its legal requirements are taken forward, as
they will likely prove impractical and will significantly increase legal
liability for issuers. We reiterate our view that the absence of a
comprehensive solution to Taxonomy usability issues will considerably
limit the potential alignment of green projects. This will also narrow
the scope of the future EU GBS. Additionally, we identify unintended
barriers for CapEx plan financing.
Our analysis
of the European Parliament’s proposals to expand the scope of the
Regulation to introduce mandatory requirements for all sustainable
bonds, finds them to be largely superfluous as well as raising real
implementation challenges. They essentially duplicate entity-level
requirements that are or will be covered by other EU sustainable finance
legislation, such as the Taxonomy Regulation and the future CSRD. Such
duplication will also unintentionally diminish the appeal of the
European sustainable bond market considerably, by adding unnecessary
complexity and costs.
Finally, we have shared this paper with the
Climate Bonds Initiative, which has confirmed its support for our
analysis and recommendations.
Read the full analysis here.
ICMA
© ICMA
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