6.4.2022
EN
Official Journal of the European Union
C 152/109
3.14.
Another issue that needs to be addressed is how to allow non-EU issuers of green bonds to access EU capital markets and vice versa — hence, the need for the alignment of taxonomies across jurisdictions globally.
In this context, it is relevant to refer to the International Platform on Sustainable Finance (IPSF), which is a forum for dialogue between policymakers, with the overall aim of increasing the amount of private capital being invested in environmentally sustainable investments.
The end objective of the IPSF is to facilitate the mobilisation of private capital towards environmentally sustainable investments.
The IPSF therefore offers a multilateral forum of dialogue between policymakers to help investors identify and seize sustainable investment opportunities that truly contribute to climate and environmental objectives.
The alignment of taxonomies should be debated and agreed upon within this forum.
3.15.
As stated earlier, ESMA, as the EU’s capital market supervisor, would play a critical role in ensuring that the proposed standards are applied as pragmatically as possible.
This would require developing the skills and building its capacity as supervisor of EU green bond reviewers.
The Commission sets the criteria for qualifications and transparency and these represent a solid basis for ESMA.
In our view, as ESMA builds its capacity it could in time support its counterparts outside the EU to apply similar standards and hence facilitate access to EU investors in emerging markets.
3.16.
Another point to consider is that the transition towards a low-carbon EU economy will require funding well beyond what is available under NextGenerationEU.
The private sector is already playing a role in this transition but much more is required.
Hence, the proposed EU green bond standard would further develop a fledgling green bond market and mobilise additional issuers besides facilitating cross-border funding in capital markets.
In the final analysis, the proposed standard for green bonds would enhance the reputation of potential issuers and investors and their commitment to sustainable development and environmental goals, namely: climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, recycling, waste prevention, pollution prevention and control, and the protection of healthy ecosystems.
The relevant environmental and social objectives would thus form part of any corporate strategy.
Furthermore, promoting an EU eco-label for financial products, whilst minimising bureaucracy, would help support private business adopting such a strategy.
3.17.
Over time the EESC expects investors to opt for EU green bond standards, as this would ensure funds are used according to the taxonomy, which in turn eases investor-reporting requirements.
Hence, adopting the proposed standard for green bonds across the EU, be it in the private or public sector, should be the goal.
3.18.
And in this connection the EESC would welcome existing green bonds being ‘grandfathered’ under the proposed standard, as well as the eventual application of such standards for NextGenerationEU bonds.
The EESC firmly believes that taxonomy-aligned green bonds would help achieve environmental goals.
Moreover, our expectation is that the EU green bond standard will increase investors’ interest in such investments, further developing the green bond market.
While this is good news for issuers and investors, the EESC cautions about the challenges referred to earlier.
3.19.
Going forward and assuming the proposal is adopted as is, it would be interesting to assess (i) the extent to which investors, both inside and outside of the EU, would demand that issuers align with the proposed standards or whether the proposal would result in divergence in the green bond market between the EU and the rest of the world, and (ii) how the proposed implementation of the EU green bond standard would affect developments in the green bond market inside and outside the EU.
3.20.
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.
This would result in fragmented capital markets, with third country issuers quite possibly not adopting the Commission’s proposed standards.
This could hold back the flow of funds required to address huge environmental challenges, particularly climate change.