WHAT IS THE AIM OF THE REGULATION?
Regulation (EU) 2023/2631:
- lays down uniform requirements for issuers who wish to use the designation ‘European green bond’ or ‘EuGB’;
- establishes a registration and supervisory system for external reviewers of EuGBs;
- provides disclosure templates, for example for pre-issuance disclosures (factsheets) and allocation reports linked to EuGBs.
KEY POINTS
Eligibility
To be able to use the designation European green bond or EuGB, issuers:
- must invest the proceeds from these bonds in full, before the bond reaches maturity, in sustainable economic activities covered by the European Union’s (EU) taxonomy1 legislation (Regulation (EU) 2020/852 – see summary). These include fixed assets, capital and operating expenditures, and assets and expenditure of households (this is known as the gradual approach);
- can alternatively allocate the proceeds from these bonds to a portfolio of fixed assets or financial assets in accordance with taxonomy requirements (portfolio approach);
- may, under flexibility rules, invest up to 15 % of the proceeds in economic activities that meet the taxonomy requirements with the exception of the technical screening criteria.
Transparency
Issuers of green bonds must:
- complete the European green bond factsheet (Annex I) and ensure that an external reviewer has approved it before issuing a bond (pre-issuance review);
- provide, until the proceeds are fully invested, an allocation report (Annex II) every 12 months on where the funds are being directed;
- receive post-issuance reviews from an external reviewer;
- draw up and make public an environmental impact report (Annex III) on the use of the funds, at least once during the lifetime of the bond;
- publish a prospectus in line with Regulation (EU) 2017/1129 (see summary), using the term ‘European green bond’ or ‘EuGB’ throughout (exceptions apply to sovereigns);
- make the factsheet, prospectus, various reviews and other information freely available on their website for at least a year after the bond matures.
Securitisation2 bonds
The following rules apply:
- bonds issued for synthetic securitisation3 cannot use the designation European green bond or EuGB;
- securitised exposures may:
- not be used to finance the exploration, mining, extraction, production, processing, storage, refining, distribution or transport of fossil fuels,
- be used to finance electricity from fossil fuels or the co-generation or production of heating/cooling and power from fossil fuels, provided this meets the ‘no significant harm’ test;
- originators of securitisation bonds designated European green bond or EuGB:
- must state the nature of the bond in their prospectus,
- confirm that they are responsible for how the proceeds are used,
- provide additional information on the economic activities being supported.
Optional disclosure templates
The European Commission has published templates for voluntary pre-issuance and post-issuance disclosures for bonds marketed as environmentally sustainable4 or sustainability-linked5, as set out Commission Communication C/2025/2277 and in Delegated Regulation (EU) 2025/753. The objective is to enable issuers of such bonds to report on the taxonomy-alignment of the security in a standardised manner.
Oversight
External reviewers must:
- be registered with the European Securities and Markets Authority (ESMA);
- satisfy practical and professional requirements;
- employ appropriate systems, resources and procedures to carry out their work;
- ensure that their analysts, employees and other staff have the necessary knowledge, experience and training;
- maintain a permanent, independent and effective system of compliance;
- implement internal due diligence policies and procedures to prevent conflicts of interest;
- ensure that their reviews are based on a thorough analysis of all available and relevant information;
- correct any methodological errors and immediately disclose them to ESMA and the issuers of the European green bonds involved;
- ensure that third-party service providers, to whom they may outsource some, but not all, assessment activities, can carry out reliable and professional assessments for which external reviewers themselves remain responsible;
- keep adequate records;
- identify, eliminate, manage and disclose any actual or potential conflicts of interest.
- not suggest that ESMA or any competent authority endorses their review;
- make their pre- and post-issuance and impact report reviews freely available on their website throughout the bond’s lifetime.
Non-EU external reviewers may provide their services under the regulation, provided that the Commission has issued an equivalence decision and that they are registered with ESMA, which may, with well-founded reasons, withdraw its approval for registration.
Supervision
National competent authorities:
- supervise issuers of European green bonds and their use of the common templates as well as issuers who choose to use the voluntary post-issuance disclosure templates for bonds marketed as environmentally sustainable or for sustainability-linked bonds (exceptions apply to sovereigns);
- have extensive supervisory and investigatory powers;
- cooperate with each other on investigations, supervision, enforcement and the exchange of information;
- regularly communicate relevant information to ESMA.
ESMA:
- may request any information it needs from external reviewers;
- has the power to carry out on-site inspections, examine records, data, procedures and other material and to interview individuals during investigations;
- may temporarily or permanently remove an external reviewer’s rights and impose fines ranging from €20 000 to €200 000, along with occasional penalties under detailed procedural safeguards set out in Delegated Regulation (EU) 2025/754. These include the right to be heard, access to the file, clear deadlines, and interim measures in urgent cases;
- charges external reviewers fees for their registration, recognition, and supervision, in accordance with Delegated Regulation (EU) 2025/755. The fees are based on ESMA’s supervisory costs and also cover expenses incurred by national competent authorities assisting ESMA. Provisions include temporary exemptions for small entities, a turnover-based cap on supervisory fees and payment terms;
- maintains a publicly accessible register of external reviewers on its website;
- is empowered to draft various regulatory technical standards needed for the implementation of the regulation.
The Commission:
FROM WHEN DOES THE REGULATION APPLY?
It has applied since 21 December 2024.
BACKGROUND
Green bonds are one of the main ways of enabling issuers from the private and public sector to raise funds that either support sustainable economic activities or help such issuers become more sustainable. They help implement the EU’s transition to a climate-neutral, resource-efficient economy.
The regulation fosters consistency and comparability in the green bond market and reduces the risk of greenwashing, for the benefit of both issuers and investors.
For further information, see:
KEY TERMS
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Taxonomy.
An investment classification system containing a list of environmentally sustainable economic activities.
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Securitisation.
The practice of pooling together various types of debt and selling them as bonds to investors.
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Synthetic securitisation.
The transfer of risk by using credit derivatives or guarantees with exposure remaining with the originator.
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Environmentally sustainable bond.
A bond with a commitment that the proceeds go to environmental activities.
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Sustainability-linked bond.
A bond with defined environmental sustainability objectives which does not involve earmarking of proceeds.
MAIN DOCUMENT
Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds (OJ L, 2023/2631, 30.11.2023).
An amendment to Regulation (EU) 2023/2631 has been incorporated into the original text. This consolidated version is of documentary value only.
RELATED DOCUMENTS
Communication from the Commission establishing guidelines for pre-issuance disclosure templates for issuers of bonds marketed as environmentally sustainable or of sustainability-linked bonds (OJ C/2025/2277, 25.7.2025)
Commission Delegated Regulation (EU) 2025/753 of 16 April 2025 supplementing Regulation (EU) 2023/2631 of the European Parliament and of the Council by establishing the content, methodologies, and presentation of the information to be voluntarily disclosed by issuers of bonds marketed as environmentally sustainable or of sustainability-linked bonds in the templates for periodic post-issuance disclosures (OJ L, 2025/753, 25.7.2025).
Commission Delegated Regulation (EU) 2025/754 of 16 April 2025 supplementing Regulation (EU) 2023/2631 of the European Parliament and of the Council by specifying rules of procedure for the exercise of the power to impose fines or periodic penalty payments by the European Securities and Markets Authority on external reviewers (OJ L, 2025/754, 25.7.2025).
Commission Delegated Regulation (EU) 2025/755 of 16 April 2025 supplementing Regulation (EU) 2023/2631 of the European Parliament and of the Council by specifying the type of fees to be charged by ESMA to external reviewers of European Green Bonds, the matters in respect of which fees are due, the amount of the fees, and the manner in which those fees are to be paid (OJ L, 2025/755, 25.7.2025).
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, pp. 13–43).
Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ L 168, 30.6.2017, pp. 12–82).
See consolidated version.
