ICMA analysis of the EU Commission proposal for a regulation on European green bonds


8 July 2021 On 6 July 2021, the European Commission published its proposal for a Regulation on European green bonds (“EuGBs”), which will be negotiated in the European Parliament and among Members of the Council of the European Union as part of the co-legislative process.

ICMA welcomes the proposed voluntary nature for the EuGB and the Commission’s intention to ensure its co-existence with the existing European and international green bond market. We also note that many of the recommendations of the Technical Expert Group (TEG) to which ICMA contributed as a member have been adopted. The provision allowing for Taxonomy alignment within a 5-year period is a strong positive allowing for the use of EuGBs in transition-enabling projects.

There are however areas of concern notably the absence of any of the flexibility provisions recommended by the TEG for alignment with the Taxonomy. We believe this may hinder among other things the potential for international uptake of the label. There is also only partial grandfathering for an EuGB if the Taxonomy criteria change during the life of the bond. This creates a number of significant challenges that we detail in this paper, which could very likely hinder the success of the label.

Access the full ICMA analysis of the draft EuGB regulation

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