European Regulation to be adopted for creating a standard for European green bonds
On 6 July 2021, the European Commission presented its proposal for a Regulation establishing "European Green Bonds", as part of the European Commission's broader agenda on sustainable finance.
The main objectives of the Regulation are (i) to establish the common set of rules that issuers must follow in order for a bond that pursues environmentally sustainable objectives within the meaning of Regulation (EU) 2020/852 (the Taxonomy Regulation) to qualify as a "European green bond" or "EuVB"; and (ii) to establish a system for registering and supervising companies acting as external verifiers of green bonds, coordinated by the European Securities and Markets Authority (ESMA).
The "European Green Bond" designation is expected to (a) make it easier for investors and companies to find environmentally sustainable investments; (b) increase private capital flows towards more environmentally sustainable investments; and (c) reduce potential reputational risks for issuers by establishing a registration and monitoring regime for external verifiers.
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