Posted on October, 05 2023

Today the European Parliament adopted the EU Green Bond regulation which is set to implement new and improved rules for ‘green bonds’. Since 2016, WWF has been a vocal advocate for credible, fully developed, and widely accepted standards in the rapidly growing green bonds market. In fact, In 2022, markets of debt securities such as bonds labelled as green, social and sustainable reached more than 20% of the market share of annual issuances in Europe and more than 13% globally. 

Jochen Krimphoff, global lead data, tools and methods, WWF’s Greening Financial Regulation Initiative (GFRI), who is also a former member of the European Commission’s Technical Expert Group on sustainable finance which developed the initial proposal for the EU Green Bond standard in 2019, said:

“It is truly encouraging to witness the European green bond standard reinforcing market oversight in its journey from ‘niche’ to mainstream.  A notable milestone is the creation of a system of registration and a supervisory framework for external reviewers as proposed by the Commission’s expert group.”

These new mechanisms will ensure that green bonds meet specific environmental objectives and adhere to established standards, enhancing credibility and transparency in the market. Moreover, it introduces a template for standardised disclosures for bonds marketed as environmentally sustainable - including sustainability-linked bonds. This will provide clarity and consistency and help investors evaluate the environmental impact and sustainability commitments associated with these bonds. 

The EU is now working on the Listing Act, a new legislation which amends the Prospectus Regulation to specify the information that must be disclosed regarding the content of green or sustainable bonds. 

“We look forward to co-legislators agreeing on disclosure requirements, based on this template, to provide information on sustainability issues in the Prospectus for securities in the context of the negotiations on the Listing Act”. Jochen Krimphoff added. 

WWF calls upon the co-legislators to make disclosures of Taxonomy alignment and principal adverse impacts mandatory for all bonds labeled as green or sustainable, as well as the creation of a sustainability alert if they are exposed to fossil fuels or misaligned with the Paris Agreement.