EU green bond standard

Key points:

The EESC

• believes that the EU green bond standard has the potential to yield significant economic benefits for both issuers and investors alike, because the proposal aims to create a universal, credible and streamlined mechanism for the issuance of green bonds, minimising informational asymmetries while conveying significant reputational benefits to issuers;

• considers that the alignment of such bonds with the EU Taxonomy Regulation makes them suited to funding economic activities that support the transition towards more sustainable and decarbonised economies;

• is however of the view that one should not underestimate the challenge of issuers complying with the standards in the EU Taxonomy and a situation where private issuers may prefer alternative green bonds and less onerous certification processes needs to be avoided;
• fears that the proposed reporting and compliance procedures may have a disproportionate financial impact on SMEs, who may find the EU green standard to be too punitive, and hence recommends a pragmatic approach in terms of the supervision and reporting requirements;
• is of the opinion that access to EU capital markets and vice versa should be based on the alignment of taxonomies across jurisdictions in- and outside the EU, otherwise, the voluntary green bond standard is unlikely to become a standard for the global green bond market;
• welcomes the requirement under the EU taxonomy for investments to meet the do-no-significant-harm (DNSH) and minimum safeguards, given the continued need to prioritise the green transformation alongside social protection and safeguarding of human and workers' rights, and proposes a monitoring committee to supervise the dynamics of the green bond market.