ECB Issues Opinions on Green Bonds Standard and CRR Proposals

In its opinion on the proposed European green bonds regulation, ECB welcomes the proposal and supports the intention to establish a harmonized framework for European green bonds. Under the proposal, the use of the European green bond standard would be voluntary. ECB considers it important that the European green bond standard becomes the prime green bond standard within the European Union. Therefore, a clear commitment to making the standard mandatory for newly issued green bonds within a reasonable time period, while outstanding green bonds would maintain their designation as green bonds for a longer time period, is considered necessary. The explanatory memorandum to the proposal states that the use of the designation European green bond is without prejudice to the requirements of CRR. ECB suggests that it should be explicitly clarified that the European green bond standard cannot be interpreted as preventing credit institutions from fully applying the CRR requirements. ECB welcomes the transparency requirements for issuers of European green bonds—that is, the requirements to complete the European green bond factsheet, annual allocation reports, and an impact report and to use templates for the disclosure of such information. From the perspective of credit institutions issuing European green bonds to finance green loans, the transparency requirements could be further enhanced by imposing an obligation on banks to monitor the alignment of the proceeds of green loans with taxonomy requirements. ECB notes that a clarification is also required on the concepts of “home” and “host” member state, as these are neither linked to other provisions nor defined in the proposal.

In its opinion on the proposal to amend CRR. ECB acknowledges that the proposed regulation consists of technical adjustments with the aim of operationalizing substantive legislative decisions implemented by the latest amendments to BRRD. ECB supports the proposed regulation, which ensures better alignment between the provisions of CRR and the provisions of the BRRD, following the entry into force of the revised framework on total loss-absorbing capacity (TLAC) and MREL. ECB supports the proposed regulation in as much as it ensures better alignment of the regulatory treatment of G-SIIs with a multiple point of entry resolution strategy, including groups with subsidiaries registered in third countries, with the treatment outlined in the TLAC standard. The ECB, however, recommends minor technical adjustments to either clarify the interpretation of the legal text or to ensure consistency of terminology used in the regulation To this end, a specific drafting proposal has been set out in a separate technical working document accompanying this opinion.

Related Links

• Opinion on Proposal on European Green Bonds
• Opinion on CRR Proposal and Suggested Changes (PDF)

Keywords: Europe, EU, Banking, Securities, Opinion, Green Bonds, CRR, BRRD, Resolution Framework, ESG, Sustainable Finance, MREL, TLAC, G-SII, ECB