This post first appeared as Blog post at FIN LAW.
On November 30, 2023, Regulation (EU) 2023/2631 on European green bonds and optional disclosures on bonds marketed as environmentally sustainable and on bonds linked to sustainability goals (EU Green Bond Regulation) published. The regulation applies in its entirety from December 21, 2024. The EU Green Bond Regulation specifies under which circumstances issuers of bonds can use the term “European green bond” or “European Green Bond” or “EuGB” for those offered in the Union Bonds may be used.
In order for a bond to qualify as a European Green Bond, the proceeds of the issue must, subject to certain leeway, be fully used for specific investment categories in accordance with the criteria for environmentally sustainable economic activities set out in the European Taxonomy Regulation (Regulation (EU) 2020/852). . In addition, as with other green bond standards, external auditors must be involved and documentary requirements must be met.
Read too
The European Green Bond Standard requires prospectus transparency and external auditing
The EU Green Bond Regulation stipulates that only bonds for which the issuers have published a securities prospectus in accordance with the Prospectus Regulation (Regulation (EU) 2017/1129) can qualify as European Green Bonds. In addition, before the issue, the issuer must complete an information sheet provided for in the EU Green Bond Regulation and ensure that the completed information sheet is subjected to a pre-issue check and that an external auditor issues a favorable opinion on this.
In order to ensure that the proceeds have been invested in accordance with the EU Green Bond Regulation, issuers must prepare an allocation report for each twelve-month period up to the point at which the proceeds of their bonds are fully utilized and indicate that the proceeds of the bonds, since their issuance and up to were used in accordance with the EU Green Bond Regulation at the end of the period specified in the report. If the allocation report was prepared after the bond proceeds have been fully utilized, the report must be subjected to a post-issue audit by an external auditor. Issuers should also provide information about the environmental impact of their bonds by publishing an impact report at least once during the term of the bonds after the proceeds have been fully utilized.
Do you want to buy cryptocurrencies?
We will show you the best providers for buying and selling cryptocurrencies such as Bitcoin, Ethereum, Solana & Co. In our comparison portal you will find the provider that is right for you.
To compare providers
Security tokens and crypto securities should also be able to meet the green bond standard
The fact that blockchain-based security tokens or crypto securities cannot meet the requirements of the European Green Bond Standard under the Electronic Securities Act (eWpG) does not arise from the EU Green Bond Regulation. Bonds for which a securities prospectus must be drawn up can be issued both as security tokens and as crypto securities in accordance with the eWpG. The funds raised from such an issue can be used for the environmental objectives of the European Taxonomy Regulation.
The information about the form of the bonds to be provided in the individual reports does not suggest that blockchain-based bonds cannot be issued under the EU Green Bond Regulation. There are therefore valid reasons why blockchain-based bonds can also be issued as European Green Bonds. It remains to be seen whether a market for European green bonds based on blockchain technology will develop.
This might also interest you