...from 21 December of this year, issuers seeking to tap capital markets to help them become more sustainable will have an additional option: they will be able to issue European green bonds under a voluntary new standard that the EU is introducing.
Green bonds have an important role to play in helping the EU raise the investment that we need to build a low‑carbon future. Some well‑established market standards for such instruments already exist, but from 21 December of this year, issuers seeking to tap capital markets to help them become more sustainable will have an additional option: they will be able to issue European green bonds under a voluntary new standard that the EU is introducing.
What makes the European green bond standard different is that it builds on the definitions of the EU taxonomy
. Proceeds will have to be used for activities that are aligned with the taxonomy. And issuers will have to be transparent about this.
This means that investors will know exactly what makes a European green bond “green”. Disclosures, to be published both before issuance and afterwards, will need to be assessed by independent external reviewers. This will build transparency and trust, empowering investors to hold issuers to account.
Importantly, with the new standard, the firms providing external reviews will for the first time be supervised at EU level. The European Securities and Markets Authority (ESMA) has been entrusted with this task. This presents a real opportunity to build a vibrant market that is open to a wide range of different companies – including smaller players and new entrants.
We believe that European green bonds have great potential to set a new “gold standard”. They will enable businesses, financial players and public and supranational entities to show their commitment to building a greener future while raising fresh money for their green projects.
And it is worth noting that European green bonds will not only be suitable for entities whose activities are already sustainable. On the contrary, European green bonds can support those issuers that are still working to transition towards becoming greener.
They can do so in several ways: for example, by enabling a company to fund multi‑year taxonomy‑alignment projects such as converting production facilities to reduce emissions. Or by making it possible to acquire or build a taxonomy‑aligned asset, a new energy‑efficient building for example.
Moreover, European green bonds can support issuers in financing transitional activities as defined by the taxonomy, such as steel, cement or aluminium. Companies active in these sectors have an important role in our economy but can find it hard to transition and tend to refrain from issuing green bonds. Yet they need investment to move to a low‑carbon future....
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