The European Union Green Bond Standard became applicable on 21 December 2024 under Regulation (EU) 2023/2631, which entered into force in December 2023, establishing a regulatory framework for the designation of sovereign and corporate green bonds. The standard introduces binding requirements for issuers who wish to use the European Green Bond label.
TAXONOMY ALIGNMENT AND INDEPENDENT OVERSIGHT
At the core of the standard is a requirement that proceeds from European Green Bond-labelled issuances be directed towards activities that meet the criteria of the EU Taxonomy for Sustainable Activities (with a flexibility pocket of up to 15% for activities without technical screening criteria), the classification system that defines what constitutes an environmentally sustainable economic activity under EU law.
Issuers must engage independent external reviewers accredited under the regulation to verify alignment with the taxonomy at both the pre-issuance and post-issuance stages. The European Securities and Markets Authority is responsible for the registration and supervision of external reviewers operating under the standard.
Reporting obligations accompany the use-of-proceeds and review requirements. Issuers are required to publish allocation reports demonstrating how proceeds have been deployed and impact reports evidencing the environmental outcomes achieved.
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