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European Green Bond Standard
October 24, 2023

The Council of the European Union has adopted a regulation creating a new European Green Bond Standard (EuGB), marking a significant step towards fighting greenwashing and advancing the sustainable finance market in the EU. The new regulation sets out the requirements for issuers wishing to use the EuGB designation and includes voluntary disclosure guidelines for other environmentally sustainable bonds and sustainability-linked bonds issued in the EU.

Green bond issuance volumes have surged over the past several years, with the European market accounting for nearly 60% of the global market. The European Commission launched its EuGB regulation proposal in July 2021, aimed at establishing a “gold standard” for green bonds.

The finalized regulation requires all proceeds from instruments issued under the new EuGB designation to be invested in economic activities that are aligned with the EU Taxonomy. Companies issuing bonds under the EuGB designation will also be required to follow strict transparency criteria, including disclosures on how the proceeds from the bonds will be used, and committing to a green transition plan.

The new regulation also establishes a new registration system and supervisory framework for external reviewers of European green bonds. The regulation will enter into force 20 days after being signed and entered in the EU’s Official Journal, and will apply 12 months after entry into force.

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