Legislators strike deal on a new standard to fight greenwashing in the bond markets 

  • First standard in the world on green bonds
  • Companies adopting the standard also commit to green transition plans
  • Clearer and stricter requirements for external reviewers and their supervision
  • The transparency framework can be also used for sustainable bonds falling short of best in class green bonds

EU negotiators on Tuesday struck a deal creating the first best in class standard for the issuing of green bonds.

The “European Green Bonds Standard” (EUGBS), which companies issuing a bond can choose to comply with, will primarily enable investors to orient their investments more confidently towards more sustainable technologies and businesses. It will also give the company issuing the bond more certainty that their bond will be suitable to investors seeking green bonds in their portfolio. The standard aligns with the more horizontal Taxonomy legislation which defines which economic activities can be considered as environmentally sustainable.

The deal was reached by EP negotiators, spearheaded by the rapporteur Paul Tang (S&D, NL), and the Swedish EU Presidency. It will enable investors to identify high quality green bonds and companies, thereby reducing greenwashing, clarify to bond issuers which economic activities can be undertaken with the bond’s proceeds, set in place a clear reporting process on the use of the proceeds from the bond sale, and standardise the verification work of external reviewers which will improve trust in the review process.


All companies choosing to use the standard when marketing a green bond will be required to disclose much information about how the bond’s proceeds will be used, but are also obliged to show how those investments feed into the transition plans of the company as a whole. The standard therefore requires companies to be engaging in a general green transition. The adoption of the standard will also guarantee to investors that the bond is taxonomy aligned.

The disclosure requirements, set out in template formats, will also be open to be used by companies issuing bonds which cannot fulfil all the requirements to qualify for the EUGBS. These companies would thereby subject themselves to ambitious transparency requirements and, as a result benefit from better trust among investors.

External reviewers

The regulation establishes a registration system and supervisory framework for external reviewers of European green bonds – the independent entities responsible for assessing whether a bond is green. Equally importantly, the regulation stipulates that any actual or even potential conflicts of interest are properly identified, eliminated or managed, and disclosed in a transparent manner. Technical standards may be developed specifying the criteria to assess the management of conflicts of interest.


Until the taxonomy framework will be fully up and running, legislators agreed to allow 15% of the proceeds from a green bond to be invested in economic activities that comply with the taxonomy requirements but for which no criteria would have yet been established to determine if that activity contributes to a green objective (technical screening criteria).

Quote – Paul Tang, rapporteur

“With EUR 100 trillion in annual trades, the European bond market is the single most popular option for businesses and governments to raise finances. Tonight the EU has taken a big step to green this massive market by adopting the first regulation in the world on green bonds. But we have also gone further by tying green bonds to the overall green transition of the company as a whole.

This Regulation creates a gold standard that green bonds can aspire to. It ensures that the money raised must go to green activities and that bonds are vetted by professional and independent third party reviewers. This is a world apart from current market standards.

Parliament also managed to include a framework for disclosures for green and sustainability-linked bonds that are keen to show they are serious about their green claims but not yet able to adhere to the strict standards of the gold standard. With a clear system for disclosures, any green bonds not using this system, will likely be looked at with increasing suspicion.”


Green bonds can play a crucial role in financing the transition to a low-carbon economy, and can help to mobilize the capital needed to achieve ambitious climate and sustainability goals. The green bond market has seen exponential growth since 2007 with annual green bond issuance breaking through the USD half trillion mark for the first time in 2021, a 75% increase on 2020. Europe is the most prolific issuance region, with 51 % of the global volume of green bonds being issued in the EU in 2020. Green bond issuance is however small compared to total bond issuance, representing about 3 to 3.5 % of overall bond issuance.