S&Ds secure EU law to put an end to greenwashing in the Green Bond market
Date
04 Oct 2023
Sections
Global Europe
Tomorrow, the European Parliament is set to adopt a new EU law on European Green Bonds to put an end to greenwashing practices in this rapidly growing market. In the negotiations, led by our MEP Paul Tang, the Socialists and Democrats secured a deal that will achieve transparency and guarantee truly green investments for investors.
The European Green Bond is a voluntary standard that companies can use to raise financing from investors. To be able to do so, they have to demonstrate that they are funding legitimate projects aligned with the EU’s taxonomy. The new rules create a gold standard, which will improve transparency and trust among investors and thereby reduce the risk of greenwashing.
Paul Tang, S&D MEP and European Parliament rapporteur on the green bond rules, highlighted:
“We have won an important battle against greenwashing. Our new law prevents companies from using green bonds to wash their brown business. This is guaranteed by putting mandatory transition plans at the centre of the new European green bond rules.
“How will these transition plans work in practice? All companies choosing to issue a European green bond will be required to explain how they will use the proceeds of the bonds. They will also be obliged to show how those investments feed into the transition plans of the company.
“This is important, as the conservative European People’s Party wanted all companies, including big oil majors, to be able to issue green bonds. We ensured that European green bonds will only be issued by companies with credible transition plans. We secured transparency to the entire green bond market, while the conservatives only wanted to regulate a small niche of green bonds.
“With the adoption of the green bonds standard, the EU once again confirms that it takes the lead in setting clear rules to stop greenwashing in financial markets. The EU is adopting a new gold standard available to those companies that want to be at the forefront of the transition to a net-zero economy.”