EU Green Bond Standard: Flexibility pocket 15%“ (9a) For certain economic activities for which there are no technical screening criteria under Regulation (EU)2020/852 that have entered into force or for certain activities in the context of international support that contributeto the environmental objectives of the Taxonomy Regulation, a limited degree of flexibility should be provided. Suchflexibility should be appropriately limited in size and scope in order to maintain a very high level of ambition forEuropean Green Bonds. Still, the issuer should demonstrate that the activities contribute substantially to one ormore of the environmental objectives, that they do not significantly harm any of the environmental objectives andthat they are carried out in compliance with the minimum safeguards. This demonstration should be included in theEuropean green bond factsheet and thus validated by an external reviewer via a positive opinion in the pre-issuancereview…
Article 4a1

Flexibility in the use of the proceeds of European green bonds
1. By way of derogation from paragraph 1 of Article 4, issuers may allocate up to 15% of the proceeds of aEuropean green bond to economic activities that comply with the taxonomy requirements, with theexception of the technical screening criteria, where those proceeds are allocated to any of the following
activities:(a) economic activities for which no technical screening criteria have entered into force by the date ofissuance of the European green bond;(b) activities in the context of international support reported in accordance with internationally agreed
guidelines, criteria and reporting cycles, including climate finance reported to the EU and United
Nations Framework Convention on Climate Change (UNFCCC) as referred to in Article 19(3) ofRegulation (EU) 2018/1999, and official development assistance (ODA) reported to the OECD
Development Assistance Committee (DAC).
2. Where the issuer makes use of the provisions in paragraph 1, it shall describe in the European green bondfactsheet the activities concerned and the estimated percentage of the proceeds intended to finance suchactivities as a total and on a per-activity basis.
3. Where the issuer allocates proceeds to the activities mentioned in point (a) of paragraph 1, it shall comply
where applicable with the generic criteria for Do No Significant Harm set out in Appendices A, B, C, and D toAnnex I to Delegated Regulation (EU) 2021/2139.
4. Where the issuer makes use of the provisions in paragraph 1 to allocate proceeds to the activities mentioned
in point (b) of paragraph 1, those activities shall comply with the relevant technical screening criteria on abest effort basis.”

Point 1(b) relates to promoting economic development and the welfare of developing countries.

First Floor, 10 Queen Street Place, London, EC4R 1BE United Kingdom
The Climate Bonds Initiative is a not-for-profit company registered in the United Kingdom.
Companies House number 7455730

www.climatebonds.net

2

ICMA Guidance Handbook (January 2022)

3

Green Bond Database Methodology

The Climate Bonds Green Bond Database methodology is currently being amended to add a flexibility pocket of
10% of the net proceeds, as follows:
Climate Bonds GBD Methodology requires at least 90% of net proceeds to be allocated to eligible green assets,projects and activities. This allows for a margin of flexibility, intended to cover only up to 10% of the total deal
size where there is uncertainty of alignment with the methodology. This includes sectors where metrics are notreadily available and/or need further assessment against a benchmark or proxy. In such cases, the methodology
employs adapted approaches.
The methodology encapsulates this approach to infrastructure financing in the context of very low-intensity,less-developed economies, where infrastructure to allow access to basic amenities and services may be eligible.
These instances will be assessed on a case-by-case basis, taking into account the relevant proportion of the useof proceeds, along with the phase of economic development, and the per-capita emissions of the jurisdiction
where the proceeds are deployed.
Where there is insufficient disclosure to accurately assess the percentage, Climate Bonds shall employ proxyassessment methodologies. In instances of uncertainty, the percentage will be assumed to exceed 10%.

Climate Bonds Initiative

Page | 2

4Suggestion for edits to CBS v4

Climate Bonds Initiative

Page | 3

5Clean text:
3.1

Use of Proceeds
3.1.1

The Net Proceeds of the debt instrument must be allocated to the Nominated projects
and assets.

3.1.2

All Nominated projects and assets must meet the documented objectives of the debt
instrument as set out in the Issuer’s Green Finance Framework.

3.1.3

Issuers must allocate at least 95% of the net proceeds of the debt instrument to projects
and assets that meet the Sector Eligibility Criteria requirements of the Standard

3.1.4

For any part of the net proceeds that will finance projects and assets that do not fully
satisfy the Sector Eligibility Criteria requirements (up to 5%), the Issuer must provide
detailed disclosures in the Green Finance Framework, and3.1.5

Any Nominated Projects and Assets which do not fully satisfy the Sector Eligibility Criteria
may be considered eligible if they meet all of the following conditions:i.
ii.
iii.
iv.

Climate Bonds Initiative

They must relate to sectors for which Climate Bonds has not yet developed
Sector Eligibility Criteria; andThey must fall under any of the Green Project categories listed in the ICMA Green
Bond Principles or the ICMA Social Bond Principles; andThe Verification Report opinion must confirm their alignment with the ICMA
Green/Social Bond principles
They must not relate to any of the following excluded activities:• The exploration, extraction or transportation of conventional or
unconventional fossil fuel reserves;• Natural gas production;• Refining crude oil to produce derivative products;• The supply and/or use of fossil fuels for power generation and heat.
• Conversion or fragmentation of high-carbon-stock land or unsustainable
operations on high-carbon stock land leading to the loss of its status as highcarbon stock land.

Page | 4