EEA EFTA Comment on European Green Bonds Proposal

Green Bonds. Photo credit: Indysystem

On 25 May 2022, Iceland, Liechtenstein and Norway submitted a joint EEA EFTA Comment on the legislative proposal for a Regulation on European green bonds. The proposal is part of the broader European Commission agenda on sustainable finance. With green bonds playing an increasingly important role in the transition to a climate-neutral economy, the proposed Regulation lays the foundation for a common framework of rules regarding the use of the designation “European green bond” for bonds that pursue environmentally sustainable objectives within the meaning of Regulation (EU) 2020/852 (“Taxonomy Regulation”).

In their Comment, the EEA EFTA States declare their support for the Commission’s proposed implementation of a standard that will help scale up and contribute to the environmental integrity of the green bond market, including by subjecting them to third party verification by external reviewers. They note that the EEA market for green bonds has grown rapidly in recent years, especially in the Nordic region where 99% of the volume of issued green bonds are already subject to third party external reviewers.

While the EEA EFTA States support the general supervisory coordination role of ESMA, they note that the registration and direct supervision of external reviewers, a role the Commission has proposed for ESMA, would benefit from the local expertise of the national supervisory authorities. Accordingly, the EEA EFTA States recommend that the competence for registration and direct supervision of external reviewers be performed by the national supervisory authorities, subject to the coordination role of ESMA.

Finally, the EEA EFTA States stress that the foreseen application date of the proposed Regulation of twenty days after its publication in the Official Journal of the EU is too short to allow for timely incorporation of the act into the EEA Agreement. To enable the simultaneous application of the Regulation across the highly integrated green bond market of the EEA, the EEA EFTA States support the position of the Council of the EU in its general approach adopted in April 2022 which states that the application date of the Regulation should be no sooner than 18 months after its publication in the Official Journal.

Read the comment here.

Find all previous EEA EFTA Comments here.