|
|
Background
The fast growing market of green bonds in the EU is not yet
harmonised. Thus far, only private standards exist. In July 2021, the
Commission issued a proposal for a Regulation on European Green
Bonds (EuGBR proposal)i. It is part of a broader EU legislative focus on
sustainable finance that has resulted in the adoption of the Taxonomy
Regulationii and the Sustainable Finance Disclosure Regulation.
Aim
This study assesses to what extent the EuGBR proposal can achieve its key regulatory goals and how it can be modified to better achieve them. The key regulatory goals of the EuGBR proposal (Chap. 2) are to:
• foster the uptake of greenbonds by issuers;
• enhance the transparency, comparability and credibility of the EU green bond market;
• prevent greenwashing;
• help prevent climate change;and
• create a ‘gold standard’ for greenbonds globally.
As with any EU legislation on financial services, the co-legislators have to decide how they want to regulate and influence the currently free market of green bonds in the EU, which has grown significantly in recent years. For the European Green Bond Standard (EuGBS) to succeed, in addition toachievingits goals, it needs to counter three dangers. The first of these is that the EuGBS makes green fundraising more expensive, cumbersome and bureaucratic, especially for small and medium-sized enterprises (SMEs).
The second is over-regulation, i.e. a scenario in which the regulatory requirements of the EuGBS suffocateentrepreneurial inventiveness. The third is that the EuGBS reduces the competitiveness of the EU financial markets by setting the wrong incentives, which would result in capital flight and reputational damage. If the EuGBS is well designed, it can counter all these risks and achieve its key regulatory goals.
This study puts a particular focus on strengthening the preventionof greenwashing andfostering marketgrowth.
Key Findings
The EuGBR proposal is a good starting point for the co-legislators to adopt an effective and reliable EuGBS. In light of the current EU green bond market(Chap. 1), this study analyses the main regulatory aspects for a successful EuGBS....
more at Parliament