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Towards a European ‘gold standard’ for green bond issuances

Following the fifth trilogue negotiations between the European Commission, the European Parliament and the Council of the European Union, on 28 February 2023 EU lawmakers announced that a provisional agreement had been reached on the European Green Bond Standards (“EUGBS”).


Back in December 2019, the European Green Deal underlined the need to scale up capital flows in sustainable investments. Towards this end, in July 2021, the European Commission presented its proposal for a European green bond standard, with a view to establishing a voluntary ‘gold standard’ for how companies can raise funds on the capital markets to finance ambitious, green investments, while simultaneously minimising disruption to existing green bond markets and protecting investors from the risks of greenwashing.

Issuers that wish to use the designation ‘European green bond’ or ‘EuGB’ for their environmentally sustainable bond issuances will be required to adhere to the uniform requirements of the EUGBS.

Provisional agreement – highlights

The following key considerations have been highlighted by the Council of the European Union:

  • While it was originally agreed that 100% of the EUGBS bond proceeds must be allocated to investments that align with the EU taxonomy, the provisional agreement recognises the need for a certain level of flexibility in respect of investments in those sectors that are not yet covered by the EU taxonomy and for certain specific activities. With a view to ensuring usability of the EUGBS from the start, while noting that this is a transitional measure which will be re-evaluated in due course, EU lawmakers have agreed to a flexibility pocket of 15% - allowing said percentage of EUGBS bond proceeds to be allocated to activities that comply with the taxonomy requirements but for which no technical criteria has yet been developed.
  • EU lawmakers have taken “greenifying” the EU capital markets one step further. The EUGBS regulation will require companies to commit to an overall green transition plan. It will also provide a separate, voluntary disclosure framework for issuers offering environmentally sustainable and sustainability-linked bonds which do not meet the high quality standard imposed by the EUGBS, but which nonetheless wish to demonstrate to the market their commitment to sustainability.
  • The EUGBS establishes a registration system and supervisory framework for external reviews of European green bonds. Insofar as supervision is concerned, the national competent authority of the EU member state will be responsible for ensuring compliance by issuers with their obligations under the new EUGBS.

ICMA supports the EUGBS

The International Capital Markets Association (ICMA), as the founder of the principles underpinning sustainable bond issuances globally, has reiterated its support for the voluntary nature of the EUGBS. ICMA has actively engaged with EU lawmakers to promote the consistency and complementarity of the EU GBS with existing market practices, and, going forward, has committed to continue making recommendations with a view to minimising duplication or inconsistencies across the EU sustainable finance legislative framework.

Next steps

The provisional agreement will need to be confirmed, and thereafter adopted, by the Council of the European Union and the European Parliament before it becomes final. The EUGBS will apply from 12 months after entering into force.

Looking ahead, it will be interesting to see how the local capital markets, regulatory authorities, and market players will respond to this development. Camilleri Preziosi will continue to monitor developments in this regard, and invites stakeholders to get in touch should they wish to discuss opportunities in the sustainable finance space.

For more information, kindly get in touch with Malcolm Falzon ( or Louisa Firman (