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SUSTAINABLE FINANCES

Following the Paris Climate Change Agreement (2015) and the United Nations Agenda 2030 for Sustainable Development, the European Commission established an EU classification system for sustainable activities (Taxonomy), and standards and labels for green financial products (Green Bond Standard) that entered into force on 20th July 2020.

WHAT ARE THE EU GREEN BONDS OR GREEN FINANCING ACCORDING TO EU STANDARDS?

EU Green Bonds are any type of listed or unlisted bond or financing or capital market debt instrument where the generated proceeds shall be exclusively used to finance or refinance, in part or in whole, eligible Green Projects, whether new and/or existing that are aligned with the four main objectives of the Green Bond Principles (GBP).

The European Green Bond´s Standard Objectives (EU GBS) are:

  • To increase financial funds allocated to green investments and assets.
  • To improve the transparency, the comparability, the accountability and the credibility throuhg with the Usability Guide.
  • To contribute to the emissions-neutral economy by 2050, together with the Taxonomy.
  • To turn into a clear and safe means to guarantee and communicate that the financial investments contribute to EU environmental objectives.
The European Green Bond Standard (EU GBS) is a voluntary standard available to issuers willing to align themselves with best market practices. It is designed to be used and accessible to EU issuers and to those issuers located outside the EU. It is based on the Green Bond Principles (GBP).

The financial market participants, banks, investment funds, insurance companies, etc., who offer financial products in the EU, must publish to the market, before 31-12-2021, what percentage of their portfolios comply with the Taxonomy and/or are considered Green Bonds, unless issuing a Disclaimer.:

  • How and to what extent they have used Taxonomy to determine the sustainability of underlying investments;
  • To what environmental objective(s) investments contribute;
  • The proportion of underlying investments that are Taxonomy aligned, expressed as a percentage of the investment, fund or portfolio.

In line with the above, companies throughout 2022 will need to disclose which investments are aligned with the EU Taxonomy, and in case not being feasible to demonstrate that all the activity of a company or a financial institution is aligned, it shall be determined:

% of SALES, % of EBITDA generated through activities aligned with the EU Taxonomy, % of CAPEX invested in such activities.

By way of conclusion, as the EU itself acknowledges, Taxonomy is to effectively 3 thresholds for economic activities able to be financed within the EU at to be considered as sustainable financing:/span>

substantial contribution to the environment (green),
significant harm (brown, or perhaps red) and
an intermediate category of neither substantial contribution nor significant harm.

We are at your disposal for any management related to sustainable finance in the building sector

We have a team of professionals who can advise you at all times and answer your questions.

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