EU Green Bond Standard Boosts Investor Confidence

The recently adopted European Green Bond Standard (EUGBS) will bolster investor confidence and support the long-term growth of the EU green bond market, according to the Institute for Energy Economics and Financial Analysis (IEEFA). In a new report, the IEEFA said the voluntary regulation would contribute to addressing greenwashing, while improved transparency would help to generate more comparable and comprehensive information, highlighting any limitations in existing market-led guidance. But the EUGBS still has its limitations, the IEEFA warned. The regulation falls short by lacking guidance on standardised impact reporting, it said, making it more difficult for investors to measure and compare environmental impacts. “With ample projects needed for the net zero transition, the EUGBS and its role in improving credibility will give issuers potential long-term benefits, thereby underpinning long-term green bond supply,” said Kevin Leung, author of the report and Sustainable Finance Analyst at the IEEFA. “Issuers can build a track record of EUGB-labelled bond issuances to reflect lower transition risks through four pillars: commitments, capital expenditure pipelines, green asset delivery, and governance.”

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