EU green bond standard: Europe’s next move to help finance sustainable projects

With the European Green Deal, the European Commission (EC) sets Europe on a path to become climate neutral by 2050. This is in line with the Paris Agreement objectives and reflects the EU’s contribution to the global fight against climate change.

Achieving this objective will require massive investments. Green bonds (GB) are one of the financial instruments that can help channel funds towards environmentally friendly projects. The interest towards green bonds is growing; but the lack of standards and definition of what ‘green’ really means is a source of uncertainties for issuers and investors. How do we ensure green bonds truly finance green projects?

Our publication Building a credible Green Bond market presents the accountancy profession’s views on how to strengthen the confidence in the green bond market. In light of the European Union Green Bond Standard (EU GBS) proposal, we recommend to:

• establish a mandatory EU GBS to ensure it is consistently applied in the market
• set up a centralised European accreditation system for external assessment, building on existing national schemes and processes
• require reporting on green bonds and on actual environmental impact at regular intervals
• ensure third-party independent assurance is obtained on allocation and environmental reports
• align the EU GBS with the EU Taxonomy

The EU Green Bond Standard (GBS)

Today the EC released its Renewed Sustainable Finance Strategy and proposal for an EU GBS. A credible, commonly accepted standard will bring value to the market and harmonise how green bonds are issued.

Investors should be able to trust the green bond market. Transparency and standardisation are key to facilitate efficient markets. Ultimately, EU citizens and their future depend on how the EU will design and put into practice its strategy towards climate neutrality. This includes practical implementation of the EU Green Bond Standard.