Debate: European green bonds
Date: WEDNESDAY, 4 OCTOBER 2023
Speaker: Paul Tang
Country: Spain
Language: EN

And it should stay this way, to ensure that sustainable finance – the finance of the future – stays here. But for that, investor worries on green bonds should be addressed. Is the money really spent on green projects? Will the promises be kept? Do green ones truly finance a company’s transition, or are they a smokescreen to conceal business as usual? That is where the European green bonds regulation comes in. It brings three ‘T’s: transparency, trust and transition to the green bond market. And let me talk about each of them in turn. Transparency is brought by creating a new gold standard for green bonds: the European green bond – fully transparent on taxonomy and on spending of revenue. The regulation also brings transparency to the market as a whole by providing templates that bonds should use when they are serious about being green, even when they cannot fulfil the hard requirements of the gold standard taxonomy yet. Hard requirements are needed, though, to create trust in the market – the second ‘T’. European green bonds should be spent on taxonomy-aligned projects. There are some exemptions for development aid where it’s difficult to prove taxonomy alignment or for activities for which criteria do not exist yet. But by and large, investors can trust that their money is spent well and that trust will be strengthened by external reviewers, independent parties, regulated by ESMA and subject to strict conflict of interest rules, who evaluate and check each and every bond. I think all green bond issuers around the world would benefit from using their services. And lastly, and importantly, the regulation puts transition plans centre stage because doing a green thing doesn’t make you green. Shell can raise money from a wind farm, but without a clear plan on how it will exit oil, showing off this green project is greenwashing – pure and simple as that. That is why the Parliament has obliged all issuers of European green bonds to show how bonds aid their transition. And I would like to thank my shadow rapporteurs, Christophe Hansen, Gilles Boyer, Bas Eickhout – who can’t be here today – and, of course, their assistants for all their excellent work and cooperation, and as well as the Swedish Presidency and the Commission for their excellent work and cooperation. With transparency, trust and transition plans, we have strengthened Europe’s green bond markets and protected Europe’s leadership in sustainable finance. Then one last remark, because to stay world leading, we have to keep moving. We cannot sit back and relax, expecting the required green investments will fall from the sky. This is why the recent change in language from the Commission sometimes worries me because transparency on ESG is not an administrative burden. It’s a fundament on which our sustainable economy is built. And if the Commission can no longer explain this, can no longer talk about the ‘why’ of sustainable finance, but only about the cost of data collection, there is a problem and the transition comes at risk. And Ms McGuinness, I am looking forward, as I always have, to working with you to ensure that the Commission does all it can until the election to continue explaining the ‘why’ and to maintain the EU’s leading role in promoting sustainable financial markets.