SUSTAINABLE INSIGHT

EU Green Bond Standard Faces Obstacles to Become the Global ‘Gold Standard’

Thu 02 Sep, 2021

The EC’s proposed regulation on a voluntary European green bond standard (EUGBS) published in July 2021 is unlikely to become a global ‘gold standard’ and trigger a meaningful transformation of the global green bond market. This is because the proposals are EU- centric (funds raised will have to finance EU taxonomy-compliant investments) and because several jurisdictions have already introduced green taxonomies that are not aligned to the standards and criteria used in the EU.

In the absence of a ‘common ground’ global environmental taxonomy, or a conclusive mapping or alignment exercise, global issuers may be reluctant to adopt standards imposed by a host regulator. A lack of taxonomy alignment and related green labels represents a fragmentation of frameworks that is arguably holding back green financing flows.

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