Report of the Technical Expert Group Subgroup of the European Commission on Green Bond Standard: Proposal for an EU Green Bond Standard

In its Interim Report on green bonds, the Technical Expert Group has made a proposal for an EU Green Bond Standard. Green bonds are bonds specifically earmarked to be used for climate-related and environmental projects. The aim of the consultation was, in light of the European Commission’s Action Plan on Financing Sustainable Growth published in March 2018, to create a standard that would further improve the credibility of green bonds and help the EU market mature.

The preliminary recommendations for the creation of a Green Bond Standard include:

• creating a voluntary EU Green Bond Standard;
• monitoring the impact of the use of a new voluntary standard;
• considering further action including possible legislation after an estimated period of three years;
• developing a legislative proposal for a centralized accreditation regime, potentially operated by the European Securities and Markets Authority, for external green bond verifiers; and
• setting up a market-based voluntary Accreditation Committee for external verifiers of green bonds during any transition period.

The preliminary recommendations to support the adoption of the EU Green Bond Standard include:

• that investors, in particular, institutional investors, should adopt the requirements of the EU Green Bond Standard when designing their green fixed-income investment strategies and communicate their commitment and expectations actively to green bond issuers and underwriters;
• adopting an ambitious disclosure regime for institutional investors;
• considering promotion of the "greening" of the financial system by expressing and implementing a preference for EU Green Bonds;
• developing credit enhancement guarantees for sub-investment grade green bonds;
• that all types of bond issuers should issue their future green bonds in compliance with the requirements of the EU Green Bond Standard;
• that the European Commission should consider setting up a grant scheme to offset the additional cost of external verification for issuers; and
• promoting adoption of the EU Green Bond Standard through the EU eco-label for financial products.

View the interim report and proposed EU Green Bond Standard. 

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