C 152/106
EN
Official Journal of the European Union
6.4.2022
1.7.
Insofar as non-EU issuers of green bonds are concerned, the EESC is of the opinion that access to EU capital markets and vice versa should be based on the alignment of taxonomies across jurisdictions globally.
In the view of the EESC this is of particular relevance since environmental challenges such as climate change cannot be addressed by the EU alone.
Unless there is some common ground on taxonomy alignment with third countries, the Commission’s proposed regulation on a voluntary green bond standard is unlikely to become a standard for the global green bond market.
The International Platform on Sustainable Finance (IPSF) should play a key role in providing this common ground by acting as a forum for dialogue between policy makers.
1.8.
Finally, the EESC welcomes the requirement under the EU taxonomy for investments to meet the do-no-significant-harm (DNSH) and minimum safeguards, given the continued need to prioritise the green transformation alongside social protection and safeguarding of human and workers’ rights.
This may nonetheless limit the scope of taxonomy alignment with third countries, particularly if such jurisdictions do not fulfil DNSH criteria such as the recognition of collective bargaining rights.
For this purpose, the EESC proposes a dedicated monitoring committee to supervise the dynamics of the green bond market, with the involvement of social partners.
2.
General comments 2.1.
On 6 July 2021, the European Commission proposed a new Regulation on a voluntary European Green Bond Standard.
The proposed Regulation aims to make the EU’s financial system more sustainable by creating a ‘gold standard’ for green bonds that can be compared to, and potentially aligned with, other market standards.
2.2.
The green bond standard would be open to all issuers of green bonds, including private, public and sovereign issuers, and includes issuers located outside of the EU.
2.3.
The proposed framework would set a voluntary standard for how companies and public authorities can use green bonds to raise funds on capital markets to finance projects.
2.4.
The standard requires that issuers allocate all of the issue proceeds to activities that meet the EU Taxonomy Regulation (EU) 2020/852 of the European Parliament and of the Council (1) requirements by the date of maturity of the bond.
It sets out environmental objectives, screening criteria and performance thresholds for economic activities.
An economic activity will be considered compliant if it: (a) contributes substantially to one or more of the environmental objectives; (b) does no significant harm to other environmental objectives; and (c) complies with social and governance safeguards.
2.5.
EU green bonds would help address funding of long-term projects (of up to 10 years) as long as such projects are aligned with the Taxonomy Regulation’s environmental objectives.
2.6.
EU green bonds would be subject to external review to ensure that they are compliant with the requirements referred to above, in particular the taxonomy alignment of projects.
Under the proposal, external reviewers would be registered with the European Securities and Markets Authority and will need to meet the conditions for registration on a regular basis.
2.7.
In the event of a change in the EU Taxonomy Technical Screening Criteria (TSC) under the Taxonomy Regulation after a bond issuance, the proposal allows issuers to continue to qualify under pre-existing criteria for a further five years.
However, the EESC is of the view that once a bond qualifies as ‘green’ at issuance, the rules for allocating the proceeds should not be changed.
In practice, though the taxonomy screening criteria change and the bond no longer meets the new criteria, it should remain ‘green’ for the entire term to maturity.
This should contribute to stable green bond markets.
2.8.
The proposal also aims to enhance investor confidence and safeguards, and to reduce risks of green bonds-funded projects not achieving the target environmental objectives.
Issuers of such bonds would be required to undertake regular reporting.
(1)
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).