FESE welcomes the Commission’s proposal for a European Green Bond (EuGB) Standard. We believe it represents a major contribution to the overall green bond market and will lead to increased transparency and comparability, as well as reducing greenwashing risks. However, with a view to maximising its potential impact, FESE would like to make a number of recommendations on some key aspects.
In particular, FESE suggests that specific incentives and adequate flexibility are provided in some provisions to boost the upcoming EuGB market, especially among SME and first-time issuers. For example, some flexibility with respect to the requirement for full Taxonomy alignment could be useful at the beginning, when the EuGB Standard is still under development and issuers are new to its practices. Similarly, a certain leeway in the reporting and pre-issuance requirements would also support first-time issuers and could avoid potential additional costs arising, inter alia, from timing mismatches between obtaining the pre-issuance review and the approval of the base prospectus. In terms of specific incentives, FESE would propose tax relief for issuers to, investors in and fund recipients of this mechanism and an EU guarantee for bonds requiring a long maturity period.
Additional suggestions include: i) adapting the rules to support full grandfathering, as recommended by the Technical Expert Group, thereby expanding the recognised partial grandfathering provisions; ii) including some transitional elements and incentives not to leave the ‘old’ green bonds behind; iii) considering a future extension of the scope to cover EU social bonds; and iv) ensuring compatibility between the Standard and other taxonomies and frameworks developed by major jurisdictions or global organisations.