ICMA: Updated analysis of the proposals for the EuGB Regulation

22 June 2022

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

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