The Council of the European Union announced today that its members have greenlighted a proposal to create European Green Bonds, setting requirements and a supervisory framework for issuers wishing to use the ‘European Green Bond’ or ‘EuGB’ designation for their green bond issuances.
The European Commission launched its EuGB regulation proposal in July 2021, as part of a series of initiatives aimed at promoting a more sustainable financial system and help facilitate the necessary investments to advance the EU’s and global climate goals.
The proposed green bond rules were designed to help facilitate the financing of sustainable investments through the creation of a ‘gold standard’ for how companies and public authorities can use green bonds to raise funds on capital markets, while meeting rigorous sustainability requirements and protecting investors from greenwashing. Key components of the framework proposed by the Commission include requiring EuGB designated bonds to fully allocate funds to projects aligned with the EU Taxonomy, provide full transparency on how bond proceeds are allocated, and be checked by an EU-supervised external reviewer to ensure compliance with the regulation.
Following the agreement in the EU Council, negotiations will begin with the European Parliament to draft a final version of the European Green Bond text.
In a statement announcing the agreement, the EU Council said:
“Environmentally sustainable bonds are one of the main instruments for financing investments related to green technologies, energy efficiency and resource efficiency as well as sustainable transport infrastructure and research infrastructure.”