Green bond standard will set sustainability requirements
According to the European Commission, the European green bond standard is a voluntary standard to help scale up and raise the environmental ambitions of the green bond market. Once it is adopted by co-legislators, it will set the standard for how companies and public authorities can use green bonds to raise funds on capital markets to finance large-scale investments, while meeting tough sustainability requirements and protecting investors.
Taxonomy needs to be truly green
Whether the green bond standard contributes to that goal depends on the underlying taxonomy, which determines which investments are considered 'green' and can be presented as such to the market. Triodos Bank believes a good taxonomy promotes transparency, counters greenwashing and drives the shift of capital towards the sustainable economy of the future. However, it is important that Europe does not include natural gas and nuclear energy as ‘green’, now that several Member States are pushing to label the use of natural gas and nuclear energy as sustainable.
Do not risk greenwashing
Triodos Bank has firmly supported the European Sustainable Finance Action Plan - of which the green bond standard is a part - and the underlying principles, aiming to create more transparency regarding green financial products and standards, and thereby supporting the true and effective reallocation of capital while limiting opportunities for greenwashing.
Andre Haag, Chief Financial Officer of Triodos Bank: “The green bond standard, as currently discussed, should be aligned with the taxonomy framework for eligible investment, excluding gas and nuclear energy. A blurry taxonomy including gas and nuclear energy does not increase levels of transparency on the financial markets, but will, instead, increase the risk of and facilitate new forms of greenwashing, like light frameworks for green bonds."
Hard to distinguish
According to Triodos Bank, if the green bond standard is based on a taxonomy including gas and nuclear energy, it will be very difficult for global debt investors to distinguish between ‘greenwashed’ and real green bonds. A new green bond standard, based on this taxonomy framework, is not the contribution to more transparency we need, and should therefore not be mandatory.
Read the full Responsible Investor article here.