EU Green Bond Standard a ‘wasted opportunity’ for issuers

The creation in February of a European Green Bond Standard has been regarded as a positive step towards a common framework for green bonds under the European Union taxonomy. It provides a high bar for issuers to meet, but it has perhaps been set too high.

Issues with the EUGBS were raised at the inaugural European agency and sub-sovereign forum, hosted by OMFIF’s Sovereign Debt Institute in Paris. This in-person event brought together a group of the leading agency and sub-sovereign issuers in Europe, along with investors, banks, policy-makers and other market participants for an in-depth discussion on the key issues affecting this segment of the public sector bond market.

For the issuers convened at the OMFIF forum, the main concern was ensuring that at least 85% of the funds raised by their green bonds are aligned with the EU taxonomy. The 15% so-called ‘flexibility pocket’ of the EUGBS is simply not enough leeway for issuers.

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Central bank action on inflation hits investment in renewables

Central bankers have historically used reserve requirements for a wide range of purposes. Today, they can be used to reduce the collateral damage of hiking interest rates.

Inflation is not over. Core consumer prices are still rising by 5.5% year on year in the US and by 7.5% in the euro area. Global disruption of supply chains, fiscal stimuli, harvests and war drove prices to levels unseen in recent history.

Many drivers of inflation are sector specific: energy has become expensive to import, while global agriculture and Taiwan’s semiconductors are struck by extreme weather. For their part, consumer-facing multinationals and bowling alleys are simply jumping on the bandwagon. Meanwhile, higher prices, the European Central Bank has discovered, are driving corporate profits through the roof.

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Πηγή: omfif.org