On March 9, the European Union (EU) Technical Expert Group on sustainable finance (the TEG) published its Usability Guide for the EU Green Bond Standard (the Guide). This is one aspect of the work mandated to the TEG by the European Commission (the Commission) under the Action Plan on Sustainable Finance and builds on the preliminary report on the EU Green Bond Standard published by the TEG in June 2019.

In the Guide, the TEG explains that the EU Green Bond Standard is a voluntary standard which may be used by issuers who wish to align their bond issues with best practices in the market. It builds on work done by other organizations, such as the Green Bond Principles developed by the International Capital Market Association (ICMA).

The EU Green Bond Standard is also aligned with the Taxonomy Regulation, in that proceeds from EU Green Bonds should finance “Green Projects” as defined in the Taxonomy (for more information, please see the January 10 edition of Corporate & Financial Weekly Digest). Issuers who wish to issue an EU Green Bond will have to develop a “Green Bond Framework” to explain how the issuer’s overall strategy meets these environmental objectives.

In addition, two types of reporting will be required by the issuer: Allocation Reporting and Impact Reporting. The Guide encourages issuers to use the reporting templates provided in Annex 3 of the Guide. The Guide also sets out the verification process for EU Green Bonds.

The TEG anticipate that the Commission will hold a public consultation on the EU Green Bond Standard for three months, starting in mid-March.

The Guide is available here.