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In depth

Deep dive into the key characteristics of the EU sustainable finance regulation

Green Bond Standard (EU GBS)

Green Bond Standard (EU GBS)

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The European Green Bond Standard (EU GBS – Regulation (EU) 2023/2631) is a voluntary standard developed by the European Commission to foster the growth of a transparent and resilient green bond market within the EU. The EU GBS Regulation has been published on the Official Journal of the EU on 30 November 2023, and following its entry into force on 20 December 2023, its provisions will apply from 21 December 2024. The Regulation establishes a set of standards that bond issuers – companies and public authorities – can choose to follow for issuing bonds labelled as EU Green Bonds (EU GBs).

An EU Green Bond is defined as any type of bond or capital market debt instrument whose proceeds will be exclusively used to finance or refinance in part or in full new and/or existing green projects meeting environmental objectives as per the EU Taxonomy. Visit the EU Taxonomy section for further information.

The EU GBS establishes four key requirements to be fulfilled:

  • Taxonomy-alignment: all the funds an EU GB raises must be fully allocated to projects aligned with the EU Taxonomy. For those sectors not yet covered by the EU taxonomy and certain very specific activities, a flexibility pocket of 15% is foreseen.
  • Transparency: full transparency on how the bond proceeds are allocated through detailed reporting requirements including, i) pre-issuance of a green bond factsheet, ii) post-issuance of an allocation and iii) impact report, as well as iv) pre-issuance and v) post-issuance performance of external reviews.
  • External review: an external registered reviewer must check all EU GBs to ensure compliance with the regulation and taxonomy alignment of the funded projects.
  • Supervision by the European Securities Markets Authority (ESMA) of reviewers: external reviewers providing services to issuers of EU GBs must be registered with and supervised by the ESMA. This will ensure the quality of their services and the reliability of their reviews to protect investors and ensure market integrity.