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Sustainable Financing: New Unified European Standard for Green Bonds Implemented

Sustainable Financing: New Unified European Standard for Green Bonds Implemented

Czech Republic
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The European Commission is preparing a new regulation on so-called green bonds, the draft for which is already in its final form and should be approved by the European Parliament shortly. The regulation will allow issuers to issue bonds under the unified designation "European green bond", in exchange for compliance by issuers with certain conditions and obligations related to the financing of their sustainable projects.

The basic requirement will be that at least 85% of the funds raised by the bonds must be used for economic activities that can be considered genuinely "green" under the Taxonomy Regulation, which issuers will be required to demonstrate through template documents. All this information will then be freely available to potential investors. Besides the issuer's initial intentions prior to the issue itself, subsequent (ongoing and final) data regarding the actual use of the funds will be subject to compulsory disclosure. In addition, compliance with the regulation will be verified in a mandatory audit by specialised external auditors several times during the life of the bond.

The forthcoming regulation also takes into account issuers who do not choose the strict restrictions of the unified European green bond but who issue other "sustainable" bonds. For these purposes, the regulation is intended to introduce voluntary templates that issuers can use to disclose information regarding the bonds they issue and the related projects they finance.

We will monitor further developments regarding the upcoming modifications in detail.

By Roman Stastny, Partner, Daniel Pospisil, Associate, JSK, PONTES

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

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