EC Adopts Green Bond Regulation, Issues Rule Supplementing CRR
The European Commission (EC) adopted a Delegated Regulation (2023/511), which supplements the Capital Requirements Regulation, on the calculation of risk-weighted exposure amounts of collective investment undertakings under the mandate-based approach. Additionally, EC welcomed a political agreement between the European Parliament and the Council on the proposal for a European Green Bond Regulation and is seeking views, until June 15, 2023, on the review of the scope and regime for non-EU benchmarks under the Benchmarks Regulation.
The European Green Bond Regulation, which is an integral part of the European Green Deal, aims to establish a voluntary high-quality standard for green bonds. The European Green Bond Standard, or EUGBS, will enable companies and public entities that wish to raise funds on capital markets to finance their green investments. The Regulation outlines that issuers of the European Green Bond would need to ensure that at least 85% of the funds raised by the bond are allocated to economic activities that align with the Taxonomy Regulation. As part of the agreement, EC will publish EU templates for issuers of other bonds with environmental objectives, even if they do not make use of the European Green Bond Standard. For first-time issuers, a standardized template will be introduced to report information on the Taxonomy-alignment of green bonds, thus reducing administrative burdens and uncertainty, both for green bond issuers and for their investors. The Regulation also creates a regime for the registration and supervision of external reviewers. External reviewers play an important role in the market by assessing green bonds in detail and providing confirmation to investors about their environmental credentials. Issuers making use of the new European Green Bond Standard will be required to employ such external reviewers at several points during the bond's lifecycle, including to check the alignment of the funded projects with the Taxonomy Regulation.
The recently adopted Delegated Regulation 2023/511 addresses the regulatory technical standards for calculation of risk-weighted exposure amounts of collective investment undertakings. The Regulation determines exposure value of a collective investment undertakings' derivatives positions, where the underlying is unknown for the purpose of Article 132a(2) of the CRR Regulation. It also outlines the calculation methodology of the exposure values for the counterparty credit risk of a netting set of a collective investment undertakings' derivatives positions. The Regulation shall come in effect from March 29, 2023.
Keywords: Europe, EU, Banking, Derivatives, Green Bond Standard, Sustainable Finance, ESG, Benchmarks Regulation, Green Bonds, EUGBS, Taxonomy Regulation, Basel, CRR, Regulatory Capital, Regulatory Technical Standards, EC
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous ArticleFINMA Approves Merger of Credit Suisse and UBS
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements,
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,