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products should include a) information on the environmental EU Green Bond. The TEG reiterates that the use of EU GBS
For an economic activity to qualify as environmentally sustainable, the following objective(s) to which the investment underlying the financial remains voluntary. Issuers of green bonds that do not want
requirements shall be fulfilled. The economic activity must: product contributes, and b) a description of how and to what to use the term “EU Green Bond” and prefer opting for
1. contribute substantively to at least one of the six environmental extent the investments underlying the financial product are other market practices are not obliged to follow the four
objectives listed above; invested in environmentally sustainable economic activities. components of the EU GBS. The TEG proposes that any type
2. not significantly harm any of the environmental objectives; The “light green” products should be also accompanied by of listed or unlisted bond or capital market debt instrument
3. be carried out in compliance with minimum social safeguards; the statement: “the investments underlying the remaining issued by a European or international issuer that is aligned
4. comply with specific “technical screening criteria”. portion of this financial product do not take into account the with the EU GBS should qualify as an EU Green Bond. The
EU criteria for environmentally sustainable investments”. proposed EU GBS sets out four core components:
Where financial products do not have environmental
Scope investment as its objective or they do not promote (1) The alignment of the use-of-proceeds with the EU
The Taxonomy Regulation applies in principle to (all) financial products made environmental or social characteristics , they should be Taxonomy.
available by financial market participants. “Financial market participants” accompanied by a disclaimer. (2) The content of a Green Bond Framework (GBF) to
means any insurance undertaking which makes available an IBIP, any be produced by the issuer to explain to investors and other
investment firm or credit institution which provides portfolio management, Time of application market participants their approach and disclosures for bond
an IORP, a manufacturer of pension products, an AIFM, a PEPP provider, a The Taxonomy Regulation will be published in the EU Official issuance aligned with the EU GBS.
UCITS management company, a manager of a qualifying venture capital fund Journal (OJ) following formal adoption by the Council of the (3) The required Allocation Reporting and Impact
or of a qualifying social entrepreneurship fund. Consequently, the Taxonomy EU (National Ministers) and the EP (plenary) and following Reporting. This is information on the total proceeds, the
Regulation does not apply (directly) to insurance intermediaries that provide legal linguistic revision. amount allocated as of the end of the reporting period, as
insurance advice with regard to IBIPs and investment firms which provide Once published in the OJ, the Regulation will enter into force well as a breakdown by activities (e.g. renewable energy
investment advice. On the contrary, the Disclosures Regulation applies to 20 days after its publication. It will be binding in its entirety (solar and wind), energy efficient buildings, public transport
intermediaries directly. and directly applicable in all Member States. It will apply by etc.), and reference to the environmental objectives and the
31 December 2021 as regards the (1) and (2) environmental environmental impact.
The Taxonomy can be used, not only for designing green financial products by objectives and by 31 December 2022 as regards the (3), (4), (4) The requirements for external verification by
those marketing portfolio management, UCITS funds, alternative investment (5) and (6) environmental objectives, as mentioned above. an approved verifier. The EU GBS institutes mandatory
funds (AIFs), insurance-based investment products (IBIP), pension products prior (before or at the time of issuance) verification of the
and pension schemes, but also for selecting holdings, identifying/expressing alignment of Green Bond with the Taxonomy as well as
investment preferences or measuring the environmental performance of an EU Green Bond Standard ex-post verification of the actual allocation of the proceeds
equity or bond fund. to green eligible projects as listed in the Allocation
The Technical Expert Group (TEG) on Sustainable Finance set Reporting.
Furthermore, according to the latest draft amendments to the IDD Delegated up by the European Commission launched in March 2019 a The European Commission will explore the possibility of
Act and MiFID II Delegated Act (expected to be adopted by the EC shortly), call for feedback on its preliminary recommendations for the a legislative initiative for an EU Green Bond Standard.
financial and insurance intermediaries will be required to take into account the development of an EU Green Bond Standard (GBS). The TEG The EC will collect feedback on the EU GBS in the context
clients’ Environmental, Social and Governance (ESG) preferences, if any, in the proposed a voluntary EU GBS building on existing market of the public consultation on the renewed sustainable
suitability assessment before providing investment advice. The Taxonomy can practices and closely linked to the EU taxonomy. The EU GBS finance strategy, taking place from 8 April to 15 July 2020.
be therefore useful for financial and insurance intermediaries to identify their is planned to be accessible to issuers located in the EU and A separate dedicated consultation with regards to a
client’s ESG preferences and to recommend products which correspond to such also to issuers outside the EU, and to rely on a verification Commission initiative for an EU GBS will be carried out in
preferences. and an accreditation structure. The TEG presented its Report the future.
on EU Green Bond Standard to the EC in June 2019 which
reflected the feedback received from stakeholders and the EU Ecolabel
Disclosure obligations analysis conducted by the Group.
The Taxonomy Regulation introduces further disclosure obligations. A distinction In its Action Plan on Sustainable Finance published in
is made between financial products that have environmental investment as its In March 2020, the TEG on Sustainable Finance published its March 2018, the European Commission mentions that the
objective -“dark green” financial products- and financial products that promote usability guide for the EU Green Bond Standard. The Guide Commission sees the potential merit in the use of the EU
environmental and social characteristic -“light green” financial products- in line with offers recommendations to the potential issuers, verifiers Ecolabel Regulation to create a voluntary EU-wide labelling
the distinction made in the Disclosures Regulation (Art.9 & Art.8 respectively). In these and investors of EU Green Bonds, on the practical application scheme. In this framework, the European Commission is
two categories, the information to be disclosed by those making available financial of the EU GBS, as it was described in the TEG Report on the currently developing a EU Ecolabel for Retail Financial

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