Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds (Text with EEA relevance)

TITLE I

SUBJECT MATTER AND DEFINITIONS

Article 1

Subject matter

This Regulation:

(a) lays down uniform requirements for issuers of bonds who wish to use the designation ‘European Green Bond’ or ‘EuGB’ for their bonds that are made available to investors in the Union;

(b) establishes a system to register and supervise external reviewers of European Green Bonds; and

(c) provides optional disclosure templates for bonds marketed as environmentally sustainable and for sustainability-linked bonds in the Union.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘issuer’ means an entity that issues bonds;

(2) ‘sovereign’ means an entity referred to in Article 1(2), point (b), of Regulation (EU) 2017/1129;

(3) ‘taxonomy requirements’ means the criteria for environmentally sustainable economic activities set out in Article 3 of Regulation (EU) 2020/852;

(4) ‘regulated market’ means a regulated market as defined in Article 4(1), point (21), of Directive 2014/65/EU of the European Parliament and of the Council (¹);

(5) ‘bond marketed as environmentally sustainable’ means a bond whose issuer provides investors with a commitment or any form of pre-contractual claim that the bond proceeds are allocated to economic activities that contribute to an environmental objective;

(6) ‘sustainability-linked bond’ means a bond whose financial or structural characteristics vary depending on the achievement by the issuer of predefined environmental sustainability objectives;

(7) ‘home Member State’ means a home Member State as defined in Article 2, point (m), of Regulation (EU) 2017/1129;

(8) ‘host Member State’ means a host Member State as defined in Article 2, point (n), of Regulation (EU) 2017/1129;

(9) ‘financial asset’ means debt or equity, or a combination thereof;

(10) ‘made available to investors in the Union’ means: (a) an offer to the public within the Union; or (b) the admission to trading of bonds on a trading venue located in the Union;

(11) ‘offer to the public’ means an offer of securities to the public as defined in Article 2, point (d), of Regulation (EU) 2017/1129;

(12) ‘trading venue’ means a trading venue as defined in Article 4(1), point (24), of Directive 2014/65/EU;

(13) ‘CapEx plan’ means a CapEx plan as provided for in point 1.1.2.2, point (b), and point 1.1.3.2, point (b), of Annex I to Delegated Regulation (EU) 2021/2178;

(14) ‘issuance costs’ means costs that are directly related to the issuance of bonds, including costs incurred for professional advice, legal services, rating, external review, underwriting and placement;

(15) ‘technical screening criteria’ means the technical screening criteria set out in the delegated acts adopted pursuant to Article 10(3), 11(3), 12(2), 13(2), 14(2) or 15(2) of Regulation (EU) 2020/852;

(16) ‘transitional economic activity’ means an economic activity that complies with Article 10(2) of Regulation (EU) 2020/852;

(17) ‘enabling economic activity’ means an economic activity that complies with Article 16 of Regulation (EU) 2020/852;

(18) ‘securitisation’ means securitisation as defined in Article 2, point (1), of Regulation (EU) 2017/2402;

(19) ‘originator’ means an originator as defined in Article 2, point (3), of Regulation (EU) 2017/2402;

(20) ‘securitisation special purpose entity’ or ‘SSPE’ means a securitisation special purpose entity or SSPE as defined in Article 2, point (2), of Regulation (EU) 2017/2402;

(21) ‘securitised exposure’ means an exposure included in a securitisation;

(22) ‘securitisation bond’ means a bond issued by an SSPE in accordance with Title II, Chapter 3;

(23) ‘synthetic securitisation’ means a synthetic securitisation as defined in Article 2, point (10), of Regulation (EU) 2017/2402;

(24) ‘fossil fuel’ mean fossil fuel as defined in Article 2, point (62), of Regulation (EU) 2018/1999.

TITLE II

REQUIREMENTS FOR THE USE OF THE DESIGNATION ‘EUROPEAN GREEN BOND’ OR ‘EUGB’

CHAPTER 1

Bond-related requirements

Article 3

Designation ‘European Green Bond’ or ‘EuGB’

The designation ‘European Green Bond’ or ‘EuGB’ shall be used only for bonds that comply with the requirements set out in this Title.

Article 4

Use of the proceeds of European Green Bonds

Before the maturity of a European Green Bond, the proceeds of such a bond shall be allocated in full, in accordance with the taxonomy requirements, to one or more of the following categories (the ‘gradual approach’):

(a) fixed assets that are not financial assets;

(b) capital expenditure that falls under point 1.1.2.2. of Annex I to Delegated Regulation (EU) 2021/2178;

(c) operating expenditure that falls under point 1.1.3.2. of Annex I to Delegated Regulation (EU) 2021/2178 and was incurred no more than three years before the issuance of the European Green Bond;

(d) financial assets that were created no more than five years after the issuance of the European Green Bond;

(e) assets and expenditure of households.

By way of derogation from the first subparagraph, issuers may deduct issuance costs from the proceeds of the European Green Bond before allocating those proceeds.

Where issuers allocate proceeds in accordance with the first subparagraph of this paragraph, they shall demonstrate in the allocation reports referred to in Article 11 that the total value of the assets referred to in the first subparagraph of this paragraph in their portfolio exceeds the total value of their portfolio of outstanding European Green Bonds.

Article 5

Flexibility in the use of the proceeds of European Green Bonds

By way of derogation from Article 4(1), issuers may allocate up to 15 % of the proceeds of a European Green Bond to economic activities that comply with the taxonomy requirements, with the exception of the technical screening criteria, provided that those activities are:

(a) economic activities in respect of which no technical screening criteria have entered into force by the date of issuance of the European Green Bond; or

(b) activities in the context of international support reported in accordance with internationally agreed guidelines, criteria and reporting cycles, including climate financing reported to the Commission under the United Nations Framework Convention on Climate Change as referred to in Article 19(3) of Regulation (EU) 2018/1999, and official development assistance reported to the Development Assistance Committee of the Organisation for Economic Cooperation and Development.

Article 6

Financial assets

The proceeds of financial assets may be allocated to other, subsequent financial assets, provided that:

(a) there are not more than three subsequent financial assets in succession;

(b) the proceeds from the financial assets last in the sequence are allocated to the uses set out in Article 4(1), first subparagraph, point (a), (b), (c) or (e), or, where applicable, to the uses set out in Article 4(3); and

(c) the issuer ensures that it is possible for external reviewers to review effectively the final allocation of proceeds.

Article 7

CapEx plans

Article 8

Application of the technical screening criteria and grandfathering

Where issuers allocate the proceeds of European Green Bonds to the uses set out in Article 4(1) and (3), they shall ensure that:

(a) those proceeds are allocated in alignment with the technical screening criteria applicable at the time of issuance of the bond;

(b) where technical screening criteria are amended after the issuance of the bond, the following proceeds be allocated in alignment with the amended technical screening criteria no later than seven years after the date of application of the amended criteria: (i) proceeds that are not yet allocated; and (ii) proceeds that are covered by a CapEx plan in accordance with Article 7, that have not yet met the taxonomy requirements.

Article 9

Exclusion of non-cooperative jurisdictions for tax purposes

The competent authorities referred to in Article 44(1) of this Regulation shall not approve a prospectus issued by a jurisdiction listed in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, by a high-risk country listed in the Annex to Delegated Regulation (EU) 2016/1675, or by issuers established in those jurisdictions or countries, where that prospectus refers to this Regulation or to the designation ‘European Green Bond’ or ‘EuGB’.

CHAPTER 2

Transparency and external review requirements

Article 10

European Green Bond factsheet and pre-issuance review

Prior to issuing a European Green Bond, issuers shall:

(a) complete the European Green Bond factsheet set out in Annex I;

(b) ensure that the completed European Green Bond factsheet has been subject to a pre-issuance review with a positive opinion by an external reviewer.

The pre-issuance review referred to in paragraph 1, point (b), shall contain:

(a) an assessment of whether the issuer has completed the European Green Bond factsheet in accordance with Articles 4 to 8 and Annex I; and

(b) the elements set out in Annex IV.

Article 11

Allocation reports and post-issuance review of allocation reports

The first 12-month period shall begin on the issuance date.

By way of derogation from the second subparagraph, issuers may set the end date of the first reporting period as the last day of the calendar year or of the financial year of issuance.

Issuers shall, in their annual allocation reports, publish the reasons for any delay or deviation that has a significant impact on the implementation of the CapEx plan.

Such post-issuance review shall not be required where, during the period covered by the allocation report, no change in allocation was made to the portfolio of assets and no asset in the portfolio was changed or was itself subject to a change in allocation, compared to the period covered by the previous allocation report. In such cases, a statement regarding the absence of post-issuance review due to the absence of such changes shall be included in the corresponding allocation report.

The post-issuance review referred to in paragraphs 4, 5 and 6 of this Article shall contain the following:

(a) an assessment of whether the issuer has allocated the bond proceeds in accordance with Articles 4 to 8, on the basis of the information provided to the external reviewer;

(b) an assessment of whether the issuer has allocated the bond proceeds as set out in the European Green Bond factsheet referred to in Article 10, on the basis of the information provided to the external reviewer;

(c) the elements set out in Annex IV.

Article 12

European Green Bond impact report

Issuers of European Green Bonds may seek a review by an external reviewer of the impact report. Such impact report reviews shall contain the following:

(a) an assessment of whether the bond issuance aligns with the broader environmental strategy of the issuer;

(b) an assessment of the indicated environmental impact of the bond proceeds;

(c) the elements set out in Annex IV.

Article 13

Sovereign issuers

A sovereign shall obtain post-issuance reviews of its European Green Bonds from:

(a) an external reviewer; or

(b) an external reviewer and a State auditor.

Article 14

Prospectus for European Green Bonds

In order to use the designation ‘European Green Bond’ or ‘EuGB’, the issuer shall publish a prospectus pursuant to Regulation (EU) 2017/1129 that meets the following conditions:

(a) the bonds are designated as ‘European Green Bond’ or ‘EuGB’ throughout the prospectus;

(b) the prospectus states that the European Green Bond is issued in accordance with this Regulation, in the section of the prospectus containing the information about the use of proceeds.

Article 15

Publication on the issuer’s website and notification to ESMA and competent authorities

Issuers of European Green Bonds shall publish on their websites and make available, free of charge and in accordance with Article 21(3) and (4) of Regulation (EU) 2017/1129, until at least 12 months have elapsed after the maturity of those bonds, the following, including any amendments or corrections thereto:

(a) before the bond is issued, the completed European Green Bond factsheet referred to in Article 10 of this Regulation;

(b) before the bond is issued, the pre-issuance review related to the European Green Bond factsheet referred to in Article 10 of this Regulation;

(c) before the bond is issued, a link to the website where the prospectus can be consulted in cases where a prospectus is published pursuant to Regulation (EU) 2017/1129;

(d) without undue delay after they are drawn up in accordance with Article 11(1) of this Regulation, the European Green Bond allocation reports;

(e) without undue delay after they are obtained, the post-issuance reviews of the European Green Bond allocation reports referred to in Article 11 of this Regulation;

(f) without undue delay after it is drawn up in accordance with Article 12 of this Regulation, the European Green Bond impact report;

(g) where applicable, the CapEx plan;

(h) where applicable, the impact report review referred to in Article 12(3) of this Regulation.

By way of derogation from the first subparagraph, point (d), where a post-issuance review of a European Green Bond allocation report takes place, that allocation report shall be published without undue delay after the post-issuance review is obtained.

The information contained in the documents referred to in paragraph 1, first subparagraph, points (a), (d) and (f), shall be provided, at the choice of the issuer, either in a language customary in the sphere of international finance, or:

(a) where the European Green Bonds are offered to the public or are admitted to trading in only one Member State, in a language accepted by the competent authority of that Member State;

(b) where the European Green Bonds are offered to the public or are admitted to trading in two or more Member States, in a language accepted by the competent authority of each of those Member States.

Article 15a

Accessibility of information on the European single access point

From 10 January 2030, when making public any of the following:

(a) the factsheet, the pre-issuance review related to the factsheet, annual allocation reports, the post-issuance review related to one or several annual allocation reports, the impact report, the impact report review referred to in Article 15;

(b) the pre-issuance disclosures referred to in Article 20, and the periodic post-issuance disclosures referred to in Article 21; the issuer shall submit that information at the same time to the relevant collection body referred to in paragraph 3 or 4 of this Article for the purpose of making it accessible on the European single access point (ESAP) established under Regulation (EU) 2023/2859 of the European Parliament and of the Council (²).

That information shall comply with the following requirements:

(a) be submitted in a data extractable format as defined in Article 2, point (3), of Regulation (EU) 2023/2859 or, where required by Union law, in a machine-readable format, as defined in Article 2, point (4), of Regulation (EU) 2023/2859;

(b) be accompanied by the following metadata: (i) all the names of the issuer to which the information relates; (ii) the legal entity identifier of the issuer, as specified pursuant to Article 7(4), point (b), of Regulation (EU) 2023/2859; (iii) the size of the issuer by category, as specified pursuant to Article 7(4), point (d), of that Regulation; (iv) the type of information, as classified pursuant to Article 7(4), point (c), of that Regulation; (v) an indication of whether the information contains personal data.

For the purpose of ensuring the efficient collection and management of information submitted in accordance with paragraph 1, ESMA shall develop draft implementing technical standards to specify:

(a) any other metadata to accompany the information;

(b) the structuring of data in the information;

(c) for which information a machine-readable format is required and, in such cases, which machine-readable format is to be used.

For the purposes of point (c), ESMA shall assess the advantages and disadvantages of different machine-readable formats and conduct appropriate field tests.

ESMA shall submit those draft implementing technical standards to the Commission.

Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph of this paragraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

CHAPTER 3

Conditions for the use of the designation ‘European Green Bond’ or ‘EuGB’ in respect of securitisation bonds

Article 16

Application of the designation ‘European Green Bond’ or ‘EuGB’ to securitisation bonds

In the case of a securitisation bond designated as ‘European Green Bond’ or ‘EuGB’:

(a) references in this Regulation to ‘issuer’ shall be construed as references to ‘originator’;

(b) references in Article 4 to ‘proceeds’ shall be construed as references to the proceeds obtained by the originator from selling the securitised exposures to the SSPE.

Where the securitised exposures are created by multiple originators, the following shall apply:

(a) the requirements for the use of proceeds set out in Articles 4 to 8 shall be fulfilled by each originator on a pro rata basis, with reference to its share in the pool of the securitised exposures;

(b) the requirements set out in Articles 10, 11, 12, 15, 18 and 19 shall be fulfilled by the originators jointly, clearly indicating the extent to which each originator has complied with its respective requirements;

(c) the requirements to obtain an external review set out in Articles 10 and 11 shall be fulfilled by the originators jointly;

(d) where multiple originators decide to seek an impact report review referred to in Article 12(3), they shall jointly comply with the requirements thereof.

Article 17

Exclusion of bonds issued for the purpose of synthetic securitisation

Bonds issued for the purpose of synthetic securitisation shall not be eligible to use the designation ‘European Green Bond’ or ‘EuGB’.

Article 18

Exclusions of certain securitised exposures

Article 19

Additional disclosure requirements in the case of securitisation