European green bond standard

KEY POINTS

Eligibility

To be able to use the designation European green bond or EuGB, issuers:

• must invest the proceeds from these bonds in full, before the bond reaches maturity, in sustainable economic activities covered by the European Union’s (EU) taxonomy¹ legislation (Regulation (EU) 2020/852 – see summary). These include fixed assets, capital and operating expenditures, and assets and expenditure of households (this is known as the gradual approach);
• can alternatively allocate the proceeds from these bonds to a portfolio of fixed assets or financial assets in accordance with taxonomy requirements (portfolio approach);
• may, under flexibility rules, invest up to 15 % of the proceeds in economic activities that meet the taxonomy requirements with the exception of the technical screening criteria.

Transparency

Issuers of green bonds must:

• complete the European green bond factsheet (Annex I) and ensure that an external reviewer has approved it before issuing a bond (pre-issuance review);
• provide, until the proceeds are fully invested, an allocation report (Annex II) every 12 months on where the funds are being directed;
• receive post-issuance reviews from an external reviewer;
• draw up and make public an environmental impact report (Annex III) on the use of the funds, at least once during the lifetime of the bond;
• publish a prospectus in line with Regulation (EU) 2017/1129 (see summary), using the term ‘European green bond’ or ‘EuGB’ throughout (exceptions apply to sovereigns);
• make the factsheet, prospectus, various reviews and other information freely available on their website for at least a year after the bond matures.

Securitisation² bonds

The following rules apply:

• bonds issued for synthetic securitisation³ cannot use the designation European green bond or EuGB;
• securitised exposures may:
  • not be used to finance the exploration, mining, extraction, production, processing, storage, refining, distribution or transport of fossil fuels,
  • be used to finance electricity from fossil fuels or the co-generation or production of heating/cooling and power from fossil fuels, provided this meets the ‘no significant harm’ test;
• originators of securitisation bonds designated European green bond or EuGB:
  • must state the nature of the bond in their prospectus,
  • confirm that they are responsible for how the proceeds are used,
  • provide additional information on the economic activities being supported.

Optional disclosure templates

The European Commission has published templates for voluntary pre-issuance and post-issuance disclosures for bonds marketed as environmentally sustainable⁴ or sustainability-linked⁵, as set out Commission Communication C/2025/2277 and in Delegated Regulation (EU) 2025/753. The objective is to enable issuers of such bonds to report on the taxonomy-alignment of the security in a standardised manner.

Oversight

External reviewers must:

• be registered with the European Securities and Markets Authority (ESMA);
• satisfy practical and professional requirements;
• employ appropriate systems, resources and procedures to carry out their work;
• ensure that their analysts, employees and other staff have the necessary knowledge, experience and training;
• maintain a permanent, independent and effective system of compliance;
• implement internal due diligence policies and procedures to prevent conflicts of interest;
• ensure that their reviews are based on a thorough analysis of all available and relevant information;
• correct any methodological errors and immediately disclose them to ESMA and the issuers of the European green bonds involved;
• ensure that third-party service providers, to whom they may outsource some, but not all, assessment activities, can carry out reliable and professional assessments for which external reviewers themselves remain responsible;
• keep adequate records;
• identify, eliminate, manage and disclose any actual or potential conflicts of interest.
• not suggest that ESMA or any competent authority endorses their review;
• make their pre- and post-issuance and impact report reviews freely available on their website throughout the bond’s lifetime.

Non-EU external reviewers may provide their services under the regulation, provided that the Commission has issued an equivalence decision and that they are registered with ESMA, which may, with well-founded reasons, withdraw its approval for registration.

Supervision

National competent authorities:

• supervise issuers of European green bonds and their use of the common templates as well as issuers who choose to use the voluntary post-issuance disclosure templates for bonds marketed as environmentally sustainable or for sustainability-linked bonds (exceptions apply to sovereigns);
• have extensive supervisory and investigatory powers;
• cooperate with each other on investigations, supervision, enforcement and the exchange of information;
• regularly communicate relevant information to ESMA.

ESMA:

• may request any information it needs from external reviewers;
• has the power to carry out on-site inspections, examine records, data, procedures and other material and to interview individuals during investigations;
• may temporarily or permanently remove an external reviewer’s rights and impose fines ranging from €20 000 to €200 000, along with occasional penalties under detailed procedural safeguards set out in Delegated Regulation (EU) 2025/754. These include the right to be heard, access to the file, clear deadlines, and interim measures in urgent cases;
• charges external reviewers fees for their registration, recognition, and supervision, in accordance with Delegated Regulation (EU) 2025/755. The fees are based on ESMA’s supervisory costs and also cover expenses incurred by national competent authorities assisting ESMA. Provisions include temporary exemptions for small entities, a turnover-based cap on supervisory fees and payment terms;
• maintains a publicly accessible register of external reviewers on its website;
• is empowered to draft various regulatory technical standards needed for the implementation of the regulation.

The Commission:

• may adopt delegated acts;
• shall, by 21 December 2028, and every 3 years thereafter, submit a report to the European Parliament and the Council of the European Union on the regulation’s implementation.