Regulation (EuGB) on European Green Bonds 2023/2631

Regulation of the European Parliament and of the Council (EU) 2023/2631 (EuGB) European Green Bonds of 22 November 2023 on European green bonds and the optional disclosure of information for bonds marketed as environmentally sustainable and bonds linked to sustainability (Text with EEA relevance).

1. This regulation enters into force on the twentieth day following its publication in the Official Journal of the European Union. 2. This regulation applies from December 21, 2024. 3. Deviating from paragraph 2 of this article, article 20, article 21 paragraph 4, Article 23 par. 6 and 7, Article 24 par. 2, Article 26 par. 3, Article 27 par. 2, Article 28 par. 3, Article 29 par. 4, Article 30 par. 3, Article 31 par. 4, Article 33 par. 7, Article 42 par. 9, Article 46 par. 6 and 7, Article 49 par. 1, 2 and 3, Article 63 par. 10, Article 66 par. 3 and Articles 68, 69 and 70 apply from December 20, 2023. 4. By way of derogation from paragraph 2 of this article, Article 40, Article 42 paragraph 1 to 8 and Article 43 shall apply from 21 June 2026. 5. Member States shall take the necessary measures to comply with Articles 45 and 49 by 21 December 2024.

This regulation aims to unify the market for environmentally sustainable bonds within the European Union. Until now existing differences in the rules between member states led to market fragmentation, made it difficult for investors to compare bonds and increased the risk of greenwashing.

The regulation introduces the designation "European Green Bond" or "EuGB", which can only be used by compliant bonds strict criteria.

Key points of the regulation:

• Use of proceeds: Revenues from the EuGB must be allocated to projects that are in line with EU taxonomy for sustainable activities. The Regulation allows for some flexibility – maximum 15 % revenues may be allocated to activities that do not fully meet the taxonomy.
• Review: EuGB issuers must obtain independent review from external assessor before and after the issue. External assessors must be registered in the ESMA authority, which supervises them.
• Disclosure of information: EuGB issuers must publish detailed information about bonds and their impact on the environment.
• Supervision: They supervise EuGB issuers competent authorities in member states.
• Sanctions: The issuer may be fined for violating the regulation administrative sanctions, including fines.

The regulation also provides optional patterns for publishing information on other bonds marketed as environmentally sustainable.

The aim of the regulation is increase transparency and credibility green bond market and make it easier for investors identification truly sustainable investments.