LONDON (Reuters) – The European Union’s securities watchdog on Tuesday proposed rules to ensure competition among external reviewers of green bonds to keep costs down for issuers.
Green bonds will play a central role in raising billions of euros to help the bloc transition to a low carbon economy by 2050.
The EU approved voluntary rules for companies that want to issue green bonds last October to give investors assurance that the proceeds will be spent on projects that are aligned with the EU’s “taxonomy”, which defines sustainable investments.
ESMA on Tuesday set out how external reviewers, based inside or outside the bloc, that check if the green bond issuance rules have been adhered to, should be registered and supervised.
“In its proposals, ESMA aims to standardise registration requirements and contribute to developing a level playing field through lower entry costs for applicants,” the watchdog said in a statement.
ESMA’s proposals cover elements such as how external reviewers should avoid conflicts of interest with the company whose bonds they are checking, the level of knowledge needed by analysts at reviewers.
The watchdog said it will consider feedback from the public consultation before sending its recommendations to the European Commission for adoption in time for December, when the new green bond rules start to be applied.
(Reporting by Huw Jones)
