The “European Green Bonds Standard” (EUGBS), which companies issuing a bond can choose to comply with, will primarily enable investors to orient their investments more confidently towards more sustainable technologies and businesses. It will also give the company issuing the bond more certainty that their bond will be suitable to investors seeking green bonds in their portfolio. The standard aligns with the more horizontal Taxonomy legislation which defines which economic activities can be considered as environmentally sustainable.

The deal was reached by EP negotiators, spearheaded by the rapporteur Paul Tang (S&D, NL), and the Swedish EU Presidency. It will enable investors to identify high quality green bonds and companies, thereby reducing greenwashing, clarify to bond issuers which economic activities can be undertaken with the bond’s proceeds, set in place a clear reporting process on the use of the proceeds from the bond sale, and standardise the verification work of external reviewers which will improve trust in the review process.

Transparency

All companies choosing to use the standard when marketing a green bond will be required to disclose much information about how the bond’s proceeds will be used, but are also obliged to show how those investments feed into the transition plans of the company as a whole. The standard therefore requires companies to be engaging in a general green transition. The adoption of the standard will also guarantee to…