New measures that aim to bolster confidence in the green bond market took effect in the European Union (EU) on Monday, as the firms that guide the allocation of green bond offerings are now being regulated.
The reforms aim to ensure that the proceeds of green bond deals are being used as promised.
The European Securities and Markets Authority (ESMA) published a list of firms that are now authorized to act as “external reviewers” for such deals — and are now subject to ESMA’s oversight, effective June 22.
Issuers planning to launch green bond offerings now need to use a registered firm to handle pre-issuance, post-issuance and impact reviews.
By helping to ensure that the proceeds of green bond offerings are being allocated properly, these firms are “vital in boosting investor confidence by ensuring that their capital genuinely supports the green transition,” the regulators noted.
Among other things, the regulations include requirements for managing conflicts of interest, holding senior management accountable and setting standards for their review methodologies.
The initial list of approved reviewers include the French and German units of Moody’s, S&P Global Ratings Europe Ltd., Sustainable Fitch Ireland Ltd. and Sweden’s ISS-Corporate AB.