Towards a European Green Bond: A Commission’s Proposal to Promote Sustainable Finance

32 Pages Posted: 1 Oct 2021 Last revised: 13 Jan 2024

See all articles by Nikos Maragopoulos

Nikos Maragopoulos

Panteion University of Athens; European Banking Institute

Date Written: April 6, 2022

Abstract

The green bond market has demonstrated a significant expansion over the previous years. Nonetheless, it remains only a very small fraction of the overall bond market. Further growth in the green bond market would provide significant green investment, thereby helping to close the European Green Deal investment gap and achieve the EU’s environmental objectives. On the basis of a legislative proposal submitted by the European Commission (Commission) in July 2021, co-legislators reached an agreement and the Regulation 2023/2631 was published in November 2023. This Regulation introduces a European Green Bond Standard (EUGBS) aiming to promote sustainable finance by making it easier for market participants to raise large-scale financing for climate and environmentally-friendly investments.

The EUGBS aspires to set a new benchmark for green bonds through the standardization of market practices and the introduction of high standards both for issuers and external reviewers. In this context, it sets out i) a framework of requirements for issuers of bonds that wish to use the designation ‘European Green Bond’ or ‘EUGB’ for their bonds, and ii) a system for the registration and supervision of external reviewers. The EUGBS aims to address the existing deficiencies in the green bond market, namely the lack of a uniform framework regarding the definitions of green assets/projects, the disclosure requirements and the performance of external reviews. To this end, it links the allocation of proceeds from a European Green Bond to the Green Taxonomy, introduces enhanced disclosures for issuers based on standardized templates and requires external reviewers to be registered with and supervised by the European Securities and Markets Authority (ESMA).

Keywords: Green bond, sustainable finance, green finance, ESG, EU Taxonomy, European Green Deal

JEL Classification: G15, G18, G21, G28, K23

Suggested Citation

Maragopoulos, Nikos and Maragopoulos, Nikos, Towards a European Green Bond: A Commission’s Proposal to Promote Sustainable Finance (April 6, 2022). European Banking Institute Working Paper Series 2022 - no. 103, Available at SSRN: https://ssrn.com/abstract=3933766 or http://dx.doi.org/10.2139/ssrn.3933766

Nikos Maragopoulos (Contact Author)

European Banking Institute ( email )

Frankfurt
Germany

HOME PAGE: http://www.ebi-europa.eu

Panteion University of Athens ( email )

Athens
Greece

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