Empowering sustainable finance with EU Green Bond Standards
Projective Group can support financial service institutions to issue EU GBS in line with the EU Green Bond Standard (EU GBS). This voluntary standard is essential for issuers looking to designate their bonds as “European Green Bonds” (EU GB) within the European Union. By adhering to the EU GBS, you can ensure that your bond proceeds are invested in environmentally sustainable projects, supported by rigorous pre-issue and post-issue sustainability reporting standards, and an effective framework for external review and supervision.
What is the EU Green Bond Standard?
The EU Green Bond Standard (EU GBS) is a voluntary standard for issuers of bonds that wish to use the designation “European Green Bond” or “EuGB” for bonds that are made available to investors in the EU. It aims to enhance market growth, transparency, and integrity by setting the highest standards for sustainability reporting and external verification.
Objectives of the EU GBS
1. Supporting Green Bond market growth
By providing a robust framework, the EU GBS fosters the expansion and maturation of the green bond market in the EU.
2. Promoting transparency and integrity
The standard ensures that green bonds meet stringent requirements, thereby enhancing market confidence and ensuring that investments truly benefit the environment.
Defining an EU Green Bond
An EU Green Bond is any listed or unlisted bond or capital market debt instrument issued by a European or international entity that meets these three key requirements:
- Green Bond framework: A comprehensive framework detailing the environmental objectives and strategies.
- Proceeds to green projects: Funds must be allocated to projects that meet the EU Taxonomy’s environmental criteria.
- External verification: Independent verification of the bond’s adherence to the green framework and reporting requirements.
Investment alignment with the EU Taxonomy
Proceeds from EU Green Bonds are expected to be invested in activities aligned with the EU Taxonomy Regulation, either directly or indirectly. This includes:
- Financing real economy assets and expenditures.
- Creating equity or debt instruments for Taxonomy Regulation-aligned activities.
The EU GBS also establishes an “Optional Disclosure Regime” which will allow institutions issuing sustainable or sustainability-linked bonds that are not Taxonomy aligned to align in some way. The details of this Optional Disclosure Regime are still to be published by the European Commission.
Benefits of the EU GBS
For issuers:
- Clear protocols: Defined procedures for issuing green bonds will enhance issuer reputation and improve ESG reporting quality.
- Market confidence: Mandatory pre- and post-issuance verifications build trust and credibility in the green bond market.
For investors:
- Transparency and credibility: Enhanced reporting and verification standards reduce reputational risks and ensure investments meet high sustainability criteria.
- Taxonomy-aligned investments: Provides a clear framework for aligning investments with EU sustainability goals.
How Projective Group can help
Our consultants have been following the evolution of the EU GBS and are able to offer in-depth expertise and tailored advisory services to help your organisation navigate the requirements. From initial assessments to comprehensive reporting and compliance strategies, we can ensure that your green bonds meet the highest standards of sustainability and transparency.
Contact us today to leverage the EU Green Bond Standard for your sustainable finance initiatives and make a lasting impact on the environment.