European Green Bonds and other sustainable bonds

Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds (the “Regulation”) is a further step in implementing the EU’s strategy on financing sustainable growth and the transition to a climate-neutral economy. With the European Green Bond standard, the EU is aiming to set a gold standard for green bonds. The Regulation is directly applicable in all Member States from 21 December 2024 except for certain provisions set forth in Article 72 (3) and (4) of the said Regulation.

The Regulation lays down requirements for issuers who wish to use the designation “European Green Bond” or “EuGB” for their bonds that are made available to investors in the EU. In case the relevant designation is used in respect of securitisation bonds, most requirements only apply to the originator. Bonds can only use the relevant designation if the issuer publishes a prospectus pursuant to Regulation (EU) 2017/1129 (the “Prospectus Regulation”) except if the issuer is an EU sovereign or the bonds are guaranteed by certain EU sovereigns. The bond proceeds must be allocated in accordance with the EU taxonomy requirements. However, limited flexibility is allowed for certain economic activities under strict conditions. Issuers and originators must fulfill various reporting and information requirements.

The Regulation further establishes a system to register and supervise external reviewers of European Green Bonds under the responsibility of ESMA. There is a specific regime for third-country external reviewers on the basis of an equivalence assessment, recognition or endorsement under which third-country external reviewers may provide external review services.

The Regulation also provides for optional pre-issuance and post-issuance disclosure templates for bonds marketed as environmentally sustainable and for sustainability-linked bonds in the EU. In this context, it needs to be pointed out that the guidelines establishing the pre-issuance disclosure templates and the delegated acts establishing the post-issuance disclosure templates have not yet been published in their final form.

The competent authority of the home Member State, designated pursuant to Article 31 of the Prospectus Regulation, supervises issuers of European Green Bonds as regards compliance with their transparency and information obligations as laid down in Article 44 (1) (a) of the Regulation. Competent authorities, designated in accordance with Article 29(5) of the Securitisation Regulation (EU) 2017/2402, ensure supervision of originators in case of securitisation bonds as regards compliance with their obligations laid down in 44 (2) of the Regulation. However, in case of European green bonds issued by EU sovereign or guaranteed by certain EU sovereigns, issuers or originators are excluded from supervision.

The competent authority of the home Member State, designated pursuant to Article 31 of the Prospectus Regulation, is responsible for supervision of issuers that use the optional post-issuance disclosure templates as regards compliance with those templates.

The CSSF is the competent authority in Luxembourg for supervising compliance of issuers and originators with the said obligations.

Where a prospectus for a European Green Bond is published pursuant to the Prospectus Regulation and the CSSF is the competent authority of the home Member State, issuers shall notify the CSSF of the publication of each of the documents referred to in Article 15(1) of the Regulation, via the e-prospectus application, without undue delay after each publication. Originators shall, where applicable, notify the CSSF via email to prospectus.filing@cssf.lu of the publication of each of the documents referred to in Article 15 (1) of the Regulation, without undue delay after each publication.

For the purposes of the notification via the e-prospectus application, user guides are available under the section “Guidance”. For the purposes of the notification by email, a Filing Form is available under the section “Forms” below.