The TEG published its interim report on an EU Green Bond Standard (EU GBS) in March 2019 for public feedback. After evaluation of the feedback, the TEG published its final report in June 2019 with recommendations to the EC on principles as well as a draft model of an EU GBS.
The TEG proposes that any type of listed or unlisted bond or capital market debt instrument issued by a European or international issuer that is aligned with the EU GBS should qualify as an EU Green Bond.
The proposed draft model links the use-of-proceeds of EU Green Bonds to the EU Taxonomy Regulation, which set up a classification system for environmentally sustainable economic activities. Under the EU Taxonomy Regulation, for an economic activity to be considered environmentally sustainable it has to (i) substantially contribute to one of the six environmental objectives determined under the EU Taxonomy Regulation, (ii) do no significant harm to any of the other environmental objectives, (iii) be carried out in compliance with minimum safeguards and (iv) comply with technical screening criteria.
This EU Green Bond Standard Usability Guide offers recommendations from the TEG, with its views on the practical application of the EU GBS, as it was described by the TEG EU GBS report. This Guide aims to support potential issuers, verifiers and investors of EU Green Bonds. It provides guidance reflecting the latest changes in the draft model of the EU GBS. As described in the TEG EU GBS report, the TEG proposes that the use of EU GBS remains voluntary. Issuers of green bonds that do not want to use the term ‘EU Green Bond’ and prefer opting for other market practices are not obliged to follow the four components of the EU GBS.