EACB feedback on the TEG preliminary recommendations for an EU Green Bond Standard

The European Association of Co-operative Banks considers the work on the establishment of an EU Green Bond Standard (GBS) pivotal to ensure the creation of a common EU framework for the EU Green Bond Market. While having contributed to the developments of the proposals as member of the TEG (in the work stream on GBS), the EACB welcomes the possibility to comment on the Report of the Technical Expert Group, presenting the views of the variety of issuers in its constituency.

EACB Members believe that the creation of the Green Bonds Standards could foster transparency and clarity to the Market, allowing the Green Bond sector to become mainstream and open to all kind of investors. For those reasons, GBS could be one of the most powerful tool to ensure the effort of the private capital flows in greening the European economy.
The purpose of the EACB is to represents a common view, pointing the attention on the principal topics that will be necessary to ensure the creation of a useful and helpful Green Bond Standard. The establishment of the taxonomy will be crucial to the development of the Green Bonds Standard. Thus the technical screening standards currently being defined by TEG are important to the good functioning of the Green Bonds Principles. In the specific case of loans to finance energy efficient buildings, for example, it is essential to get a simple definition, based only on EPCs (as it is the only available EU-wide measure today) and an incentivising approach.

The EACB supports the recommendations in the report, however some suggestions have been put forward on specific points, such as for recommendation n. 2, exploring the possibility to reduce the assessment period and verify the impacts of the GBS earlier than the deadline of 3 years proposed in the report.

Moreover regarding the TEG proposal on the eligible green asset qualify for refinancing with no maximum look-back period (question 4.1 of the consultation), EACB underlines that there should be a compromise between allowing issuers to go back to older financing activity which is still relevant while taking into account the life-cycle of the asset i.e. establishing minimum threshold for the eligibility of those assets that have a substantial remaining life. We hope that the TEG will take them into consideration when defining the final report on GBS.

EACB agrees also on the reporting framework for EU Green Bond issuers, proposed by the TEG (question 7.1). However, we believe that a quantitative portfolio reporting based on KPIs for green projects will be the most valuable approach to follow, not requiring too detailed reporting on a regional and local distribution level.
On the verification, EACB is in general favourable, especially considering expectations that the ex-ante verification by external parties will be simplified, thus there will be capacity within their mandate to also verify allocation and reporting, which at the moment vary significantly in scope and quality among the different issuers.


Finally EACB points the attention on the necessity to guarantee the alignment between GBS and EU Taxonomy that is yet to be established: there will not be a strong and efficient EU Green Bond Standard, without a well defined European taxonomy of green activities and products. Both initiatives together will play a fundamental role in the creation of the EU ECOLABEL for financial products, that (reccomamndation.11), should encompass also Green Bonds.

For the full document please read here.