Activities of Petros KOKKALIS related to 2021/0191(COD)
Shadow opinions (2)
OPINION on the proposal for a regulation of the European Parliament and of the Council on European green bonds
OPINION on the proposal for a regulation of the European Parliament and of the Council on European Green Bonds
Amendments (32)
Amendment 20 #
Proposal for a regulation
Recital 3
Recital 3
(3) Environmentally sustainable bonds are one of the main instruments for financing investments related to low- carbon technologies, energy and resource efficiency as well as sustainable transport infrastructure and research infrastructure. Financial or non-financial undertakings or sovereigns can issue such bonds. Various existing initiatives for environmentally sustainable bonds do not ensure common definitions of environmentally and socially sustainable economic activities. This prevents investors from easily identifying bonds the proceeds of which are aligned with, or are contributing to environmental objectives as laid down in the Paris Agreement.
Amendment 23 #
Proposal for a regulation
Recital 6
Recital 6
(6) The lack of harmonised rules for the procedures used by external reviewers to review environmentally sustainable bonds and the diverging definitions of environmentally sustainable activities make it increasingly difficult for investors to effectively compare bonds across the internal market with respect to their environmental objectives. The market for environmentally sustainable bonds is inherently international, with market participants trading bonds and making use of external review services from third party providers across borders. Action at Union level could reduce the risk of fragmentation of the internal market for environmentally sustainable bonds and bond-related external review services, and ensure the application of Regulation (EU) 2020/852 of the European Parliament and of the Council34 in the market for such bonds. The designation ‘European green bond’ or ‘EuGB’ should progressively become mandatory for issuers of bonds marketed as environmentally sustainable, after an initial period of three years, following a review of this Regulation.. __________________ 34 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).
Amendment 34 #
Proposal for a regulation
Recital 10 a (new)
Recital 10 a (new)
(10a) Union institutions and bodies should adhere to Union standards in the pursuit of financing sustainability objectives, including those defined by Regulation (EU) 2020/852.They should thus use the ‘European green bond’ standard for any bond issuance that has environmental sustainability as its objective. The use of the ‘European green bond’ by the Union institutions will increase the standard's credibility and uptake by other financial and non- financial undertakings or sovereigns and will establish it as a best practice in the area of green bond issuance globally. As a leading global issuer of green bonds, the European Investment Bank has already committed to aligning its green bond programme with the European green bond standard.
Amendment 36 #
Proposal for a regulation
Recital 12
Recital 12
(12) The time needed to transform an asset to fully align the economic activity to which it relates with the taxonomy requirements should reasonably not exceed five years, except in certain circumstances where it may take up to tseven years. For that reason, eligible capital expenditure should relate to economic activities that meet or will meet the taxonomy requirements within five years from the issuance of the bond, unless a longer period of up to tseven years is justified by the specific features of the economic activities and investments concerned.
Amendment 44 #
Proposal for a regulation
Recital 15
Recital 15
(15) Issuers of European green bonds should abide by their commitments to investors and allocate the proceeds of their bonds within a reasonably short time after issuance. At the same time, issuers should not be penalised for allocating bond proceeds to economic activities that do not yet meet the taxonomy requirements, but will do so within the five year period (or extended tseven year period). Issuers should in any case allocate all proceeds of their European green bonds before the maturity of each bond.
Amendment 45 #
Proposal for a regulation
Recital 16
Recital 16
(16) Unlike issuers that are financial or non-financial undertakings, issuers that are sovereigns can use the proceeds of European green bonds to indirectly finance economic activities that are fully aligned with the taxonomy requirements through the use of programmes of tax expenditures or programmes of transfers, including subsidies. In such cases, sovereigns ensure that economic activities funded by such programmes comply with the terms and conditions of those programmes. For that reason, when providing pre- and post- issuance reviews of European green bonds issued by sovereigns and the proceeds of which are allocated to tax expenditures or subsidies in accordance with terms and conditions that are aligned with taxonomy requirements, external reviewers should not be required to assess the taxonomy- alignment of each economic activity funded by such programmes. Where that is the case, it should be sufficient for external reviewers to assess the alignment of the terms and conditions of the funding programmes concerned with the taxonomy requirements.
Amendment 48 #
Proposal for a regulation
Recital 18
Recital 18
(18) To improve transparency, issuers should also disclose the environmental impact of their bonds by means of the publication of impact reports, which should be published at least once during the lifetime of the bond. In order to provide investors with all information relevant to assess the social and environmental impact of European green bonds, impact reports should clearly specify the metrics, methodologies and assumptions applied in the assessment of the environmental impacts. To strengthen the comparability of European green bonds and to facilitate the localisation of relevant information, it is necessary to lay down templates for the disclosure of such information.
Amendment 53 #
Proposal for a regulation
Recital 5
Recital 5
(5) In ensuring alignment with the objectives of the Paris agreement, so as to ensure that business practices are compatible with the transition to a sustainable economy and limiting global warming to 1,5° C, and given the existing divergences and absence of common rules, it is likely that Member States will adopt diverging measures and approaches, which will have a direct negative impact on, and create obstacles to, the proper functioning of the internal market, and be detrimental to issuers of environmentally sustainable bonds. The parallel development of market practices based on commercially driven priorities that produce divergent results causes market fragmentation and risks further exacerbating inefficiencies in the functioning of the internal market. Divergent standards and market practices make it difficult to compare different bonds, create uneven market conditions for issuers, cause additional barriers within the internal market, and risk distorting investment decisions.
Amendment 56 #
Proposal for a regulation
Recital 6
Recital 6
(6) The lack of harmonised rules for the procedures used by external reviewers to review environmentally sustainable bonds and the diverging definitions of environmentally sustainable activities make it increasingly difficult for investors to effectively compare bonds across the internal market with respect to their environmental objectives and can lead to cases of greenwashing. The market for environmentally sustainable bonds is inherently international, with market participants trading bonds and making use of external review services from third party providers across borders. Action at Union level could reduce the risk of fragmentation of the internal market for environmentally sustainable bonds and bond-related external review services, and ensure the application of Regulation (EU) 2020/852 of the European Parliament and of the Council34 in the market for such bonds. __________________ 34 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).
Amendment 58 #
Proposal for a regulation
Recital 7
Recital 7
(7) A uniform set of specific requirements should therefore be laid down for bonds issued by financial or non- financial undertakings or sovereigns that voluntarily wish to usewish to use the labels ‘green’ and ‘environmentally sustainable’, including the designation ‘European green bond’ or ‘EuGB’ for suchthose bonds. Specifying quality requirements for European green bonds in the form of a Regulation should ensure that there are uniform conditions for the issuance of such bonds by preventing diverging national requirements that could result from a transposition of a Directive, and should also ensure that those conditions are directly applicable to issuers of such bonds. Issuers that voluntarily use the designation ‘European green bond’ or ‘EuGB’ should follow the same rules across the Union, to increase market efficiency by reducing discrepancies and thereby also reducing the costs of assessing those bonds for investors. The designation ‘European green bond’ or ‘EuGB’ should over time become mandatory for issuers of bonds marketed as environmentally sustainable, after an initial period of three years, following a review of this Regulation. During the period in which the European green bond standard remains voluntary, bonds issued in the Union and marketed as environmentally sustainable without the designation ‘European green bond’ or ‘EuGB’ should also disclose their alignment with the requirements set out in Regulation (EU) 2020/852.
Amendment 60 #
Proposal for a regulation
Recital 37
Recital 37
(37) The objectives of this Regulation are twofold. On the one hand, it aims to ensure that uniform, transparency requirements apply to the use of the designation of ‘European green bond’ or ‘EuGB’. On the other hand, it aims to establish a simple registration system and supervisory framework for external reviewers by entrusting a single supervisory authority with the registration and supervision of external reviewers in the Union. Both aims should facilitate capital raising for projects that pursue environmentally sustainable objectives. Since those objectives cannot be sufficiently achieved by the Member States but can be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives,
Amendment 64 #
Proposal for a regulation
Recital 8
Recital 8
(8) In accordance with Article 4 of Regulation (EU) 2020/852, and in order to provide investors with clear, quantitative, detailed and common definitions, the requirements set out in Article 3 of that Regulation should be used to determine whether an economic activity qualifies as environmentally sustainable. For the purposes of this Regulation, economic activities relating to nuclear energy and natural gas should not qualify as environmentally sustainable. Proceeds of bonds that use the designation ‘European green bond’ or ‘EuGB’ should exclusively be used to fund economic activities that either are environmentally sustainable and are thus aligned with the environmental objectives set out in Article 9 of Regulation (EU) 2020/852, or contribute to the transformation of activities to becomein order to align them with the requirements of Article 3 of Regulation (EU) 2020/852 and thus render them environmentally sustainable. Those bonds can however be used both to finance such environmentally sustainable activities directly through the financing of assets and expenditures that relate to economic activities that meet the requirements set out in Article 3 of Regulation (EU) 2020/852, or indirectly through financial assets that finance economic activities that meet those requirements. It is therefore necessary to specify the categories of expenditures and assets that can be financed with the proceeds of bonds that use the designation ‘European green bond’ or ‘EuGB’.
Amendment 68 #
Proposal for a regulation
Recital 9
Recital 9
(9) The proceeds of European green bonds should be used to finance economic activities that have a lasting positive impact on the environment. Such lasting positive impact can be attained in several ways. Since fixed assets are long-term assets, a first way is to use the proceeds of such European green bonds to finance fixed tangible or fixed intangible assets that are not financial assets, provided that those fixed assets relate to economic activities that meet the requirements for environmentally sustainable economic activities set out in Article 3 of Regulation (EU) 2020/852 (‘taxonomy requirements’) and the minimum social safeguards. Since financial assets can be used to finance economic activities with a lasting positive impact on the environment, a second way is to use those proceeds to finance financial assets, provided that the proceeds from those financial assets are allocated to economic activities that meet the taxonomy requirements. Since the assets of households can also have a long- term positive impact on the environment, those financial assets should also include the assets of households. Since capital expenditure and selected operating expenditure can be used to acquire, upgrade, or maintain fixed assets, a third way is to use the proceeds of such bonds to finance capital and operating expenditures that relate to economic activities that meet the taxonomy requirements or that will meet those requirements within a reasonably short period from the issuance of the bond concerned, which can be extended however where duly justified by the specific features of the economic activities and investments concerned. For the reasons outlined above, the capital and operating expenditures should also include the expenditures of households.
Amendment 71 #
Proposal for a regulation
Recital 9 a (new)
Recital 9 a (new)
(9a) This Regulation builds on current market best practices for green bonds and should therefore not create distortions. Existing standards for green bonds exclude the financing of nuclear energy and fossil gas from green bond proceeds. Thus, to ensure the integrity of the European green bond standard, the proceeds of European green bonds should not finance activities relating to electricity generation from nuclear energy or natural gas. Equally, any activities that undermine long-term environmental goals, including the priority objectives set out in Decision (EU) 2022/… [Proposal for a Decision of the European Parliament and of the Council on a General Union Environment Action Programme to 2030] should not be funded by green bonds.
Amendment 74 #
Proposal for a regulation
Recital 10
Recital 10
(10) Sovereigns are frequent issuers of environmentally sustainable bonds and should therefore also be allowed to issue ‘European green bonds’, provided that the proceeds of such bonds are used to finance either assets or expenditure that meet the taxonomy, or assets or expenditure that will meet those requirements within a reasonably short period from the issuance of the bond concerned, which can be extended however where duly justified by the specific features of the economic activities and investments concerned.
Amendment 77 #
Proposal for a regulation
Recital 10 a (new)
Recital 10 a (new)
(10a) Union institutions and bodies should adhere to Union standards in the pursuit of financing sustainability objectives, including those defined by Regulation (EU) 2020/852. They should thus use the ‘European green bond’ standard for any issuance of a use of proceeds bond that has environmental sustainability as its objective. As a leading global issuer of green bonds, the European Investment Bank has already committed to aligning its green bond programme with the European green bond standard.
Amendment 80 #
Proposal for a regulation
Recital 12
Recital 12
(12) The time needed to transform an asset to align the economic activity to which it relates with the taxonomy requirements should reasonably not exceed five years, except in certain circumstances where it may take up to ten years. For that reason, eligible capital expenditure should relate to economic activities that meet or will meet the taxonomy requirements within five years from the issuance of the bond, unless a longer period of up to ten years is justified by the specific features of the economic activities and investments concerned.
Amendment 83 #
Proposal for a regulation
Article 6 – paragraph 1 – subparagraph 1
Article 6 – paragraph 1 – subparagraph 1
1. The use of proceeds referred to in Article 4 shall relate to economic activities that fully meet the taxonomy requirements, or that will fully meet the taxonomy requirements within a defined period of time as set out in a taxonomy-alignment plan.
Amendment 84 #
Proposal for a regulation
Recital 13
Recital 13
(13) Investors should be provided with all information necessary to evaluate the environmental impact of all bonds marketed as green or environmentally sustainable, including European green bonds, and to compare such bonds with each other. For that purpose, specific and standardised disclosure requirements need to be set out which provide transparency about how the issuer intends to allocate the bond proceeds to eligible fixed assets, expenditures and financial assets and how those proceeds have actually been allocated. Such transparency can best be achieved by means of European green bond factsheets and annual allocation reports. To strengthen the comparability of European green bonds and to facilitate the localisation of relevant information, it is necessary to lay down templates for the disclosure of such information.
Amendment 87 #
Proposal for a regulation
Article 6 – paragraph 1 – subparagraph 3
Article 6 – paragraph 1 – subparagraph 3
The period referred to in the first and second subparagraph shall not exceed five years from bond issuance, unless a longer period of up to tseven years is justified by the specific features of the economic activities concerned as documented in a taxonomy- alignment plan.
Amendment 96 #
Proposal for a regulation
Article 7 a (new)
Article 7 a (new)
Article 7a Use of the European green bond standard by Union institutions and bodies Union institutions and bodies shall use the European green bond standard and apply the criteria of Articles 4 to 7 for any bond issuance that has environmental sustainability as its objective.
Amendment 98 #
Proposal for a regulation
Article 7 b (new)
Article 7 b (new)
Article 7b Mandatory use of the designation European green bond or EuGB As of [three years after the date of entry into force of this Regulation], and notwithstanding Article 7a, all issuers of bonds marketed as green or environmentally sustainable shall use the designation European green bond or EuGB and shall comply with the requirements set out in this Title until their maturity.
Amendment 109 #
Proposal for a regulation
Article 1 – paragraph 1
Article 1 – paragraph 1
This Regulation lays down uniform requirements for issuers of bonds marketed as green or environmentally sustainable and for issuers that wish to use the designation ‘European green bond’ or ‘EuGB’ for their environmentally sustainable bonds made available to investors in the Union, and establishes a registration system and supervisory framework for external reviewers of European green bonds.
Amendment 111 #
Proposal for a regulation
Article 2 – paragraph 1 – point 5 a (new)
Article 2 – paragraph 1 – point 5 a (new)
(5a) ‘bond marketed as green or environmentally sustainable’ means a bond whose issuer provides investors with a science-based commitment that the proceeds of that bond are allocated to an economic activity that is environmentally sustainable;
Amendment 114 #
Proposal for a regulation
Title II
Title II
Conditions for the use of the designation ‘European green bond’ or ‘EuGB’ and for the use of other bonds marketed as green or environmentally sustainable
Amendment 134 #
Proposal for a regulation
Article 7 – paragraph 2 a (new)
Article 7 – paragraph 2 a (new)
2a. By way of derogation from paragraphs 1 and 2, the designation of ‘European green bond’ and ‘EuGB’ shall not be used when any of the proceeds are allocated to: (a) nuclear power generation; or (b) electricity generation, or cogeneration from heat/cool and power, or production of heat/cool from fossil gaseous fuels unless the life-cycle greenhouse gas emissions are lower than 100gCO2e/kWh.
Amendment 136 #
Proposal for a regulation
Article 7 a (new)
Article 7 a (new)
Article 7a Mandatory use of the designation 'European green bond' or 'EuGB' As of ...[three years after the date of entry into force of this Regulation], and notwithstanding Article 7a, all issuers of bonds marketed as green or environmentally sustainable shall use the designation 'European green bond' or ‘EuGB’ and shall comply with the requirements set out in this Title until the maturity of the bonds.
Amendment 138 #
Proposal for a regulation
Article 7 b (new)
Article 7 b (new)
Article 7b Use of the European green bond standard by Union institutions and bodies Union institutions and bodies shall use the European green bond standard and apply the criteria set out in Articles 4 to 7 for any bond issuance that has environmental sustainability as its objective.
Amendment 156 #
Proposal for a regulation
Article 10 – paragraph 1
Article 10 – paragraph 1
1. Issuers of European green bonds shall, after the full allocation of the proceeds of such bonds and at least onceevery five years during the lifetime of the bond, draw up a European green bond impact report on the environmental impact of the use of the bond proceeds by using the template laid down in Annex III.
Amendment 181 #
Proposal for a regulation
Article 37 – paragraph 1 – subparagraph 1 – point e
Article 37 – paragraph 1 – subparagraph 1 – point e
(e) to indefinitely suspend an offer of European green bonds for a maximum of 10 consecutive working days on any single occasionmarketed as green or environmentally sustainable, including where there are reasonable grounds for suspecting that Articles 8 to 13 of this Regulation have been infringed;
Amendment 183 #
Proposal for a regulation
Article 37 – paragraph 1 – subparagraph 1 – point f
Article 37 – paragraph 1 – subparagraph 1 – point f
(f) to prohibit or indefinitely suspend advertisements or require issuers of bonds marketed as green or environmentally sustainable, including European green bonds, or financial intermediaries concerned to cease or suspend advertisements for a maximum of 10 consecutive working days on any single occasion where there are reasonable grounds for believing that Articles 8 to 13 of this Regulation have been infringed;
Amendment 187 #
Proposal for a regulation
Article 63 a (new)
Article 63 a (new)
Article 63 a Review By 31 December 2023, and every three years thereafter, the Commission shall, based on the input from the Platform on Sustainable Finance, present a report to the European Parliament and the Council on the application of this Regulation. That report shall evaluate at least the following: (a) the impact of the European green bond standards on closing the yearly gap of additional investments needed to meet the Union climate targets as set out in Regulation (EU) 2021/1119 of the European Parliament and of the Council1a, as well as on redirecting private capital flows towards sustainable investments for the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems; (b) the state of false claims regarding the use of bond proceeds for environmentally sustainable activities; (c) the development of global best practices and standards for bonds marketed as green or environmentally sustainable. Accompanying any proposed revision of Regulation (EU) 2020/852, the Commission shall assess whether this Regulation need to be amended, specifically when such revisions are related to an extension of the scope of Regulation (EU) 2020/852 to social objectives, or to other categories of environmental objectives. __________________ 1aRegulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1).