EU proposes voluntary European Green Bond Standard

It aims to set a ‘gold standard’ for how companies and public authorities can use green bonds to raise funds to finance investments and help reduce the risk of greenwashing

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The European Commission has proposed a regulation for the creation of a high-quality voluntary standard for bonds financing sustainable investments.

The European Green Bond Standard (EUGBS) seeks to set a “gold standard” for how companies and public authorities can use green bonds to raise funds on capital markets to finance ambitious investments, while meeting tough sustainability requirements and protecting investors from greenwashing.

In addition, it aims to protect market integrity by ensuring legitimate environmental projects are financed.

The EUGBS proposal is part of the new Sustainable Finance Strategy that sets out several initiatives to tackle climate change and other environmental challenges, while increasing investment and inclusiveness of SMEs in the EU’s transition towards a sustainable economy.

The new Strategy seeks to extend the existing sustainable finance toolbox to facilitate access to transition finance, increase the contribution of the financial sector to sustainability and enhance the resilience of the economic and financial system to sustainability risks.

Valdis Dombrovskis, Executive Vice President for an Economy that Works for People, said: “Today’s Sustainable Finance Strategy is key to generate private finance to reach our climate targets and tackle other environmental challenges. We also want to create sustainable funding opportunities for small and medium-sized companies. We will work with our international partners to deepen co-operation on sustainable finance, as global challenges call for global action.

“We also propose a Green Bond Standard to fight greenwashing and clearly recognise those bonds that truly represent a sustainable investment.”

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