Brussels, Belgium – European Parliament has adopted a new voluntary standard for the use of a “European Green Bond” label, the first of its kind in the world.
The regulation, adopted by 418 votes in favour, 79 against and 72 abstentions, lays down uniform standards for issuers who wish to use the designation ‘European green bond’ or ‘EuGB’ for the marketing of their bond.
The standards will enable investors to direct their money more confidently towards more sustainable technologies and businesses. It will also give the company issuing the bond more certainty that its bond will be suitable for investors who want to add green bonds to their portfolio. This will increase interest in this kind of financial product and support the EU’s transition to climate neutrality.
The standards align with the EU’s taxonomy framework that defines which economic activities the EU considers environmentally sustainable.
“Businesses want to make the green transition. And the European Green Bond gives them the best tool yet to help them finance this shift. It provides a transparent and trustworthy tool to drive a company’s transition plan,” The rapporteur, Paul Tang said.
“Today’s vote is the starting shot for businesses to get serious about their green bond issuances. Investors are eager to invest in European Green Bonds and from today onwards businesses can start developing them. This way European Green Bonds can boost Europe’s transition to a sustainable economy,” he added.
Until the taxonomy framework is fully up and running, issuers of a European Green Bond would need to ensure that at least 85 percent of the funds raised by the bond are allocated to economic activities that align with the EU’s Taxonomy Regulation. The other 15 percent can be allocated to other economic activities provided the issuer complies with the requirements to clearly explain where this investment will go.