European Commission to issue NextGenerationEU green bonds
The European Commission has adopted an independently evaluated Green Bond framework, which will contribute to the issuance of up to €250 billion green bonds for NextGenerationEU. This would make up 30% of the initiative’s total issuance.
The Green Bond framework gives investors in these bonds reassurance that the funds will be allocated to green projects, with the Commission reporting on its environmental impact from these projects. The Commission plans to start the first green bond issuance in October, subject to market conditions.
Following the principles of the International Capital Market Association (ICMA), the framework has been reviewed by a second party opinion provider. From the review, they consider the framework aligns with the ICMA’s Green Bond Principles and the EU’s wider Environmental, Social and Governance (ESG) strategy.
Commissioner of Budget and Administration, Johannes Hahn, said: “The EU's intention to issue up to €250 billion in green bonds between now and end-2026 will make us the largest green bond issuer in the world. This is also an expression of our commitment to sustainability and places sustainable finance at the forefront of the EU's recovery effort.”
With this framework, the Commission ensures that proceeds from NextGenerationEU will finance the share of climate-relevant expenditure under the Recover and Resilience Facility (RRF). Under the RRF rules, EU Member States must dedicate at least 37% of their Recovery and Resilience Plan to climate-relevant investments and reforms.
In addition, they also need to report to the Commission their green expenditures. With this information, the Commission can then use this to show investors how funds have been used to finance the green transition.
The framework identifies nine categories that will help to organise reporting and the Commission, in line with standard practice, plans to report on funding allocation and impact.
Learn more about the NextGenerationEU’s Green Bond Framework by visiting the European Commission’s website.