EU Green Bond Regulation Level 2 Measures

Bonds marketed as environmentally sustainable and sustainability-linked bonds pre- and post-issuance disclosure

The European Green Bond Regulation (the "EUGB Regulation") introduces a voluntary lighter disclosure regime applicable to bonds marketed as environmentally sustainable and sustainability-linked bonds. For further information on the EUGB Regulation please see Legal Flash | The EU Parliament and the Council approve the EU Green Bonds Regulation.

Article 20(1) and Article 21(4) of the EUGB Regulation mandates the European Commission (the "Commission") to adopt a delegated act to supplement the regulation by establishing the content, methodologies and presentation of the information to be disclosed in the pre- and the post-issuance disclosure templates, respectively, applicable to bonds marketed as environmentally sustainable and sustainability-linked bonds.

While, as of the date of this post, the consultation in relation to the pre-issuance templates is still in preparation, on 17 December 2024, the Commission published a draft delegated regulation with respect to post-issuance disclosures, including an Annex (together, the "Delegated Regulation") in which the relevant templates are set out, and opened a consultation process with feedback to be provided before 28 January 2025.

The Delegated Regulation emphasizes that in order to ensure consistency with disclosures issuers have to publish for European Green Bonds and in line with the overall purpose of facilitating investor comparison of products, the post-issuance templates should build on the templates for post-issuance disclosure under the EUGB Regulation.

For those issuers who voluntary decide to opt-in the voluntary regime, they should disclose the relevant post-issuance information for each 12-month period until the full allocation of proceeds of the bonds, beginning on the issue date and up to either the end of the calendar year, or the end of the financial year of issuance. Post-issuance disclosures should be published on the issuer’s website until at least 12 months after the maturity of the bond concerned.

ESMA supervision of external reviewers

To issue European Green Bonds, an issuer has to use an external reviewer: before the issuance of the European Green Bonds and after the full allocation of its proceeds. The EUGB Regulation introduces a registration and supervisory regime for external reviewers of sustainable bonds administered by the European Securities and Markets Authority (ESMA).

The EUGB Regulation mandate the Commission to adopt a delegated act to supplement the EUGB Regulation by specifying (i) the procedure for the exercise of ESMA's power to impose fines or periodic penalty payments in relation to its power to supervise external reviewers (Article 63(10)), and (ii) the type of fees, the matters in respect of which fees are due, the amount of the fees, and the manner in which they are to be paid in relation to the EUGB Regulation (Article 66(3)).

On 17 December 2024, the Commission published a delegated act in respect of each of (i) and (ii) above and opened the consultation process until 28 January 2025.

Next steps

These consultations will be open until 28 January 2025, after which the Commission will adopt the relevant acts (amended as it deems fit) and Parliament and Council will generally have two months to formulate any objections otherwise the acts will be published in the Official Journal of the European Union (OJEU) and enter into force on the twentieth day following publication. The plan is for the Commission to adopt these in the first quarter of 2025.