{"id":17732,"date":"2023-04-14T09:40:24","date_gmt":"2023-04-14T07:40:24","guid":{"rendered":"https:\/\/wiersholm.no\/?post_type=newsletter&p=17732"},"modified":"2025-03-13T14:01:38","modified_gmt":"2025-03-13T13:01:38","slug":"provisional-agreement-reached-in-the-eu-on-european-green-bonds","status":"publish","type":"newsletter","link":"https:\/\/wiersholm.no\/en\/newsletters\/provisional-agreement-reached-in-the-eu-on-european-green-bonds\/","title":{"rendered":"Provisional agreement reached in the EU on European green bonds"},"content":{"rendered":"

Provisional agreement reached in the EU on European green bonds<\/h1>\n\n\n
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The EU is taking a further step to reach its strategy to become climate-neutral by 2050.<\/p>\n\n

Financial Regulatory<\/a><\/div><\/div>\n\n\n

On 28 February 2023, the Council of the European Union and the European Parliament reached a provisional agreement on the establishment of the European Green Bond Standard (\u201cEuGB\u201d). The standard is likely to impose strong positive impacts on the green bond market, as it sets out novel, clear requirements for both the green element and the verification of green bonds. If finalised, it will become the first standard in the world to regulate the qualification of green bonds.<\/p>\n\n\n\n

Green bonds are bonds issued with the purpose of financing environmentally sustainable activities. The use of proceeds of green bonds is therefore restricted to activities with green characteristics, thereby providing environmental benefits. Green bonds are today one of the most widely used financial instruments to allocate capital to green activities. Green bonds therefore have an important role in financing the shift to a green economy and in reaching international climate goals. However, there has been a need for a uniform standard to improve the efficiency and credibility of the green bond market. The aim of the EuGB standard is to promote the use and strengthen the credibility of the green bond product, thereby also reducing the risk of greenwashing and ensuring continued growth.<\/p>\n\n\n\n

The idea of an EU Green Bond Standard has been in development in the EU for several years. In 2019, the Commission\u2019s Technical Expert Group (TEG) published its final report on the development of a European Green Bond Standard. In the report, TEG identified several weaknesses in the current green bond market. These included unclear criteria for the use of proceeds of green bonds and weak mechanisms to ensure reporting and monitoring of the bonds\u2019 environmental benefits. This led to lacking transparency and risks of greenwashing, thereby hindering the potential of the green bond market. The establishment of a voluntary general standard, with precise and strict requirements for issuers, was for this reason recommended by the TEG.[1]<\/a><\/em><\/p>\n\n\n\n

The European Commission initiated the drafting of the standard in 2019 and presented its proposal in July 2021. Negotiations have since then taken place in the European Parliament and the European Council. The provisional agreement reached in February may be the last step to finalize the standard. The standard will be voluntary to apply and its requirements are based on best market practice, such as the principles established by the International Capital Market Association and the Climate Bonds Initiative. A brief summary of the main elements of the EuGB follows below:<\/p>\n\n\n\n