Led by Frankfurt partner Dr Jochen Seitz global law firm Hogan Lovells has advised Deutsche Kreditbank AG (DKB) on the first base prospectus approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) and presumably Europe’s first base prospectus for the issuance of European Green Bonds in accordance with Regulation (EU) 2023/2631 on European Green Bonds (EU Green Bond Standard).
In addition to the option of issuing Green Bonds in accordance with the ICMA Green Bond Principles and Social Bonds in accordance with the ICMA Social Bond Principles, DKB’s base prospectus, which has been approved by BaFin on 29 May 2024, also provides for the option of issuing European Green Bonds in accordance with the EU Green Bond Standard from 21 December 2024 onwards.
The EU Green Bond Standard entered into force on 20 December 2023 and is applicable as of 21 December 2024. By introducing the EU Green Bond Standard, the EU legislator intends to create a comprehensive and uniform legal framework for the issuance and marketing of green bonds or bonds marketed as environmentally sustainable. The proceeds of bonds that are labelled as EU Green Bond must be used for environmentally sustainable economic activities in accordance with the requirements of the Taxonomy Regulation, as specified by the European Commission’s technical screening criteria. A taxonomy-compliant use of proceeds requires that the economic activities make a substantial contribution to achieving one or more of the environmental objectives set out in the Taxonomy Regulation. In order to ensure compliance with the requirements under the EU Green Bond Standard, issuers of European Green Bonds are subject to comprehensive information and reporting obligations, including the obligation to publish a factsheet and allocation and impact reports. In addition, the national competent authorities are granted a broad repertoire of administrative measures.
For the first time, BaFin has now defined the requirements for base prospectuses for the issuance of European Green Bonds. According to the ESMA Statement on “Sustainability disclosure in prospectuses” dated 11 July 2023 (ESMA32-1399193447-441), the prospectus must contain detailed information on the use of proceeds, including information on taxonomy conformity, as well as on the key elements and the availability of the factsheet required by the EU Green Bond Standard. Further prospectus law requirements for European Green Bonds will be determined at a later date in the form of delegated acts of the European Commission. The delegated acts are to be prepared under the amended Prospectus Regulation. The amendments to the Prospectus Regulation are part of the EU Listing Act and are expected to enter into force in autumn 2024; the European Commission will then have 18 months to adopt these delegated acts.
