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A new type of green bond, regulated by the EU, that provides a more in-depth set of controls and reporting than those established by the EU CommunityThe latter is the International Capital Market Association, which has so far Green Bond Principles (GBP) Already used by green bond issuers; they are voluntary guidelines with no sanctions. The only sanctions are those of the market: if you go astray, you lose the trust of investors. In contrast, the European Green Bond (EUGB) requires a series of mandatory obligations that necessarily increase compliance costs in the context of increased control and supervision.
Nicoletta Mazzali, partner at Galbiati-Sacchi Associati law firm, stressed that “ICMA’s Green Bond Principles represent a set of best practices and are voluntary in nature.” The EUGB Regulation, however, represents a mandatory framework that bond issuers must adopt, known as the “Green Bond Principles”.European Green Bonds“. At this point, it is useful to remember that non-compliance with the EUGB provisions is subject to a specific monitoring regime and sanctions by public authorities”.
Compare
According to the Climate Bonds Initiative (CBI), green bonds have now surpassed the 3 trillion USD mark. The Icma scheme is the main approach, which is the most appreciated by the market. Can the EU model succeed? In collaboration with Galbiati-Sacchi Law Firm, we compare the two regulations.
Regulation 2023/2631, which introduces European Green Bonds, will apply from December 21 this year. The obligations it imposes on issuers, advisors and auditors will generate regulatory adjustment costs, which may prevent most people from abandoning the Icma program. Judging by the CBI data, this approach has had some success. But on the other hand, the obligations imposed by European legislation provide greater guarantees of control: projects financed by investors should flow to green projects with greater security.
Obligations and freedomshave
EU regulations therefore provide a very specific mandatory framework, starting from the economic activity to be financed, which must comply with the European taxonomy, the classification provided for in EU Regulation 2020/852, which defines what is green and what is not. However, for Icma, the range of economic activities that can be financed is much wider and, most importantly, there are no rules as strict as the taxonomy.
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