Some €22bn worth of bonds have been issued under the new European Green Bond standard in the year since its introduction, as borrowers cautiously adopt the new benchmark.
One year after the launch of the European Green Bond (EuGB) standard — a voluntary framework introduced by the European Commission to address greenwashing concerns — markets have begun to adopt the new label, according to research from the Institute for Energy Economics and Financial Analysis (IEEFA).
Bonds issued under the standard must allocate at least 85% of their proceeds to activities aligned with the EU Taxonomy, comply with new pre- and post-issuance reporting requirements, and undergo review by an ESMA-registered external reviewer.
So far, the Kingdom of Denmark is the only sovereign issuer to have adopted the standard, while the European Investment Bank is among the supranational institutions to have issued bonds under the new criteria.
In its research, IEEFA welcomes the growing range of issuers but warns that further progress is needed.
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“Early momentum is encouraging, with every transaction achieving robust oversubscription. But the standard only captures a small fraction of taxonomy-aligned investment so far,” said Kevin Leung, IEEFA sustainable finance analyst for European debt markets and author of the report.
For now, bonds aligned with the new standard account for only a small share of the broader European green bond market. As of the third quarter, European issuers had brought more than €250bn in green bonds to market, according to Lipper data.
IEEFA also highlights some notable absences. Neither the European Commission nor several major European financial institutions have yet issued bonds under the new standard.
The conversion of existing bonds, the development of innovative structures, and the expansion of taxonomy-aligned financial products that incentivise broader issuer participation could help increase adoption of the standard, IEEFA said.
