Legal column by Marie-Aude Noury, member of the Paris Bar, partner, Squair A.A.R.P.I.

Against a backdrop of contestation over the Green Deal, with the forthcoming presentation of an "Omnibus" regulation by the European Commission to revisit the main regulatory pillars of sustainable finance, a first issue of European Green Bonds ("EuGB") was launched last week in Italy.

The European Green Bond Regulation (EU) 2023/2631 ("EuGB Regulation") came into force on December 21, 2024.[1] is directly applicable in the member states. The EuGB regulation provides a regulatory standard that companies can choose from in order to issue green bonds. Its application remains a choice - not an obligation - open to companies.

A voluntary regulatory standard

To qualify as a "European Green Bond" or "EuGB", a bond issue must meet the eligibility and transparency criteria set out in the EuGB regulation.

The first criterion is that the proceeds of the bond issue must be allocated to an aligned economic activity, i.e. one that is environmentally sustainable within the meaning of the European Taxonomy. However, there is flexibility of allocation up to 15%, under certain conditions.

In addition, EuGBs are subject to a pre- and post-issuance transparency regime.

EuGBs are issued within the framework of a prospectus, with pre- and post-issuance documents to be drawn up.

Prior to issue, issuers must complete the information sheet, in accordance with Annex I of the EuGB Regulation, and obtain a pre-issuance examination document, in accordance with Annex IV of the said Regulation, issued by an external examiner. The external examiner is supervised and registered by ESMA.

A prospectus is drawn up in accordance with Regulation (EU) 2017/1129 ("Prospectus Regulation"), including in particular the information required by the EuGB Regulation, and approved by the competent authority (with the exception of sovereign issuers).

After issue, issuers must provide an annual report on the use of funds, in accordance with Annex II of the EuGB Regulation, until all issue proceeds have been allocated. A post-issuance review of the allocation report, in accordance with Appendix IV of the EuGB Regulation, is carried out by an external reviewer once all issue proceeds have been allocated (or, for each report in the case of a portfolio approach, unless there is no change).

An impact report, in accordance with Annex III of the EuGB Regulation, is prepared by the issuer, after the product has been fully affected and at least once during the life of the bonds. The impact report may be subject to review by an external examiner.

The information sheet, prospectus, various reports and review documents are available to the public free of charge on the issuer's website until at least one year after the bonds mature.

Prospectus regulations

Regulation (EU) 2024/2809 of October 23, 2024 (" Listing Act ("The Prospectus Regulation"), which came into force on December 4, 2024, amends the Prospectus Regulation.

Certain provisions relating to debt securities with ESG characteristics are of deferred application and will become applicable from June 5, 2026. The information to be included in the prospectus will be specified in delegated acts issued by the European Commission. A draft amendment to Delegated Regulation 2019/979 has been submitted for public consultation by ESMA. The proposals, which, according to the proposed approach, should also concern EuGBs, focused in particular on the draft of a dedicated appendix for this type of instrument, as well as on the fact sheet and the arrangements for its incorporation by reference in the prospectus.

In addition to EuGBs, pre-issue and periodic disclosure templates for issues marketed as environmentally sustainable or sustainability-related are also being put out to public consultation by ESMA, with the ambition of converging them with the templates already established for EuGBs. Issuers will be able to refer to them voluntarily.

During the transitional period from December 21, 2024 to June 5, 2026, during which these technical measures are due to be adopted by the European Commission, the AMF has published a document to address any practical questions that may arise.[2].

[1] Regulation (EU) 2023/2631 of the European Parliament and of the Council of November 22, 2023 on European green bonds and the optional publication of information for bonds marketed as environmentally sustainable bonds and for sustainability-linked bonds, OJEU November 30, 2023

[2] AMF, Regulation establishing a European standard for green bond issues "EuGB", December 26, 2024