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Green bonds are a category of bonds used to finance projects with a positive environmental impact. Issuers voluntarily meet standards set by an independent body—typically a non-governmental organization—that go beyond legal requirements.
The first green bonds were issued in 2007 by the European Investment Bank (EIB), then under the name Climate Awareness Bond. Since then, the market for these instruments has been growing dynamically.
You will find various types of issuers in the green bond market:
European institutions – primarily the European Investment Bank and other supranational organizations
The US market – for example, the government-sponsored mortgage agency FNMA
Corporations – Apple, Pepsi, Verizon, and other large companies
National and local governments – financing infrastructure projects through green bonds
The European Union is an undisputed leader in this field. As part of the NextGenerationEU program, established in 2021 as a tool for economic recovery following the COVID-19 pandemic, it has become the world's largest issuer of green bonds. In November 2024, it announced that under this program, it had sold bonds worth more than EUR 65 billion.
The EU enshrined specific rules for issuing a "European Green Bond" (EuGBS) in Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023. The standard has been in effect since 21 December 2024.
In addition to the EuGBS, the regulation also addressed two other types of "green" bonds—bonds marketed as environmentally sustainable and sustainability-linked bonds. However, it imposes significantly lower requirements for their issuance than for European green bonds.
An issuer wishing to use the "European Green Bond" designation must meet the following conditions:
85% of the funds raised from the issuance must be used for projects covered by the EU taxonomy
15% of the funds may be used for projects that do not meet EU taxonomy regulations but align with their requirements and satisfy the "do no significant harm" criterion
The issuer is not from a high-risk country or a country that does not cooperate on tax matters
The bond is assessed prior to issuance by an external reviewer registered with the European Securities and Markets Authority (ESMA)
The issuer publishes a prospectus in accordance with Regulation (EU) 2017/1129
In addition to the rules mentioned, issuers of European Green Bonds must fulfill ongoing reporting obligations. They must submit an annual report on the allocation of proceeds from the bonds sold and prepare an environmental impact report.
Despite the regulation being in effect, the EU recently decided not to use the EUGBS standard for its own issuances.
The NextGenerationEU program was launched back in 2021 with a fixed schedule running through 2026. The final version of the EUGBS was only completed last year. The European Commission therefore announced that it would maintain the original rules for the entire program, which are based on the International Capital Market Association (ICMA) guidelines—rules that are widely used but less stringent than the EUGBS.
This decision has drawn criticism. Bas Eickhout, co-chair of the Greens in the European Parliament, called it "absurd" and pointed out that the Commission is undermining the credibility of its own standard.
Sustainable finance experts have expressed similar views, warning that the EU is sending a contradictory signal and slowing the adoption of the new rules among other issuers.
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Although the regulation has only been in effect since December 2024, the first European Green Bonds appeared on the market as early as the beginning of 2025.
Italy's A2A – the first issuer in January was the energy company A2A, which issued a 500 million EUR bond.
Île-de-France Mobilités – the French regional public transport operator issued a 1 billion EUR bond, becoming the first public entity to issue a bond in accordance with the EuGBS framework.
A key event was the issuance by the European Investment Bank, which brought a 3 billion EUR bond to market in April.
This transaction represented not only the largest EuGB bond issued to date, but also the first issuance of its kind by a supranational institution that is a regular participant in capital markets.
The bond saw extraordinary investor interest – demand exceeded 40 billion EUR, which corresponds to an oversubscription of more than thirteen times.
Despite the initial successful issuances, it remains to be seen whether the new standard will become the "gold standard" for green financing, as the EU intended.
Several factors may hinder the mass adoption of European Green Bonds:
High regulatory requirements for issuers may deter smaller companies
Absence of relevant incentives for investors reduces the attractiveness of the instrument
High costs associated with issuing EuGBS represent a significant barrier
These obstacles could easily cause the European Green Bond market to remain entirely niche, without any significant impact on the broader sustainable investment market.
Bonds, investment funds, and similar instruments are not just an alternative to bank financing – they are a tool that allows you to raise funds directly from investors. Without bank covenants, without disclosing sensitive data to a bank.
At endors, we specialize in capital markets and help companies raise capital for development and business growth. Our partner Michal Kapitán has successfully overseen over 100 bond issues totaling 10 billion CZK.
Jiří Mlčák, the author of this article, provides all services related to corporate bond issues at endors and can advise you on how to meet the requirements of the new EuGBS standard.
Get in touch with us at info@endors.cz or call us at +420 601 501 630.
Jiří is an attorney specializing in capital markets, contract law, and the defense industry. Throughout his career at leading Czech law firms, he has focused primarily on licensing proceedings before the Czech National Bank, business project financing, AML, and compliance. In the defense sector, he provides legal counsel and participates in negotiations with international partners. He also gained valuable experience at the Ministry of Industry and Trade and the High Court in Prague.
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