March 06, 2019

The Technical Expert Group on Sustainable Finance (TEG), which EC had set up in July 2018, published an interim report on its preliminary recommendations for the development of an EU Green Bond Standard, along with the status of the work conducted so far (as of February 2019). Stakeholders can comment on the interim report by responding to a targeted questionnaire by April 03, 2019.

The interim report presents the status of the work conducted so far (as of February 2019) on the EU Green Bond Standard (by TEG), provides a rationale for action, and explains how such a standard should be developed and implemented in Europe. The report proposes the content of a draft EU Green Bond Standard (Annex 1), explains the purpose of the standard, sets the ambition level, and explains how the creation of the EU Green Bond Standard will address barriers to market development. The report also provides a preliminary guidance to EC on the proposed way forward for the EU Green Bond Standard, including the creation of a centralized accreditation regime for external verifiers, and proposes possible legislative initiatives or amendments. Finally, the report elaborates on possible incentives, based on the EU Green Bond Standard, to enhance the growth of green bond issuance and the links with other sustainable financing instruments in a wider context. The report should also feed into the work being launched in parallel by EC on the potential EU Ecolabel for green financial products.

The proposed voluntary EU Green Bond Standard by TEG is compatible with the existing market practices and builds on these market practices. The standard would rely on a strong verification and accreditation structure and will be closely linked to the new EU-wide classification system for environmentally sustainable economic activities (EU taxonomy). Feedback is requested on key barriers to the development of the green bond market, eligible use of proceeds raised, reporting and verification requirements, and possible incentives to help the European green bond market grow. The results of this exercise will feed into the work of the TEG and its final recommendations to EC, which will be presented in June 2019.

 

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Comment Due Date: April 03, 2019

Keywords: Europe, EU, Banking, Securities, Sustainable Finance, Green Bond Standard, TEG, EC