(Adds market reaction)
By Huw Jones
LONDON, March 1 (Reuters) - The European Union said on
Wednesday it had reached a deal on the world's first set of
comprehensive rules for issuing green bonds to meet the bloc's
net zero goals, although compliance will be on a voluntary
basis.
EU member states and the European Parliament jointly agreed
on Tuesday standards for companies that want to use the term
"European green bond" or EuGB.
Currently investors are faced with a plethora of national
practices on green bonds which can be hard to compare, though an
attempt to make the EU norms mandatory failed.
The rules will enable investors to identify high quality
green bonds and companies, thereby reducing greenwashing or
exaggerated environmentally-friendly claims, parliament said.
"Tonight the EU has taken a big step to green this massive
market by adopting the first regulation in the world on green
bonds," lawmaker Paul Tang said in a statement.
The green bond market broke through the half trillion dollar
mark in 2021 for the first time, with Europe accounting for just
over half of the issuance. Green bond issuance, however, is
still only about 3-3.5% of total bond issuance, parliament said.
Investments must be in projects aligned with the EU's
taxonomy, or guidebook, on sustainable projects.
The Association for Financial Markets in Europe (AFME), an
industry body, said the new standards will complement existing
norms, but more work was needed on making the taxonomy usable.
The bloc has pledged to issue guidance on applying the taxonomy
in practice.
The rules also put in place a clear reporting process on the
use of the proceeds from the bond sale, and standardise how
external reviewers verify that a bond is green, parliament said.
Companies issuing a green bond will have to show how the
investments feed into their plans for transitioning to net zero,
it added.
EU states and parliament need to formally rubber stamp the
deal, which would apply a year after its entry into force.
(Reporting by Huw Jones
Editing by Mark Potter and Angus MacSwan)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
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