Brussels: Europe and the Arabs
More than three years after the first transaction of our NextGenerationEU (NGEU) green bonds, the European Union has issued more than €65 billion of NGEU green bonds, putting the EU on track to become the world’s largest issuer of green bonds. According to a statement issued by the Commission, the executive body of the European Union in Brussels, the statement added: “In line with President von der Leyen’s announcement in her 2020 State of the Union speech, the European Commission will continue to work towards issuing 30% of NextGenerationEU financing through green bonds. The NGEU green bonds are expected to enable €264.6 billion of green investments in the nine sectors set out in the NGEU green bonds framework, including clean transport, clean energy and energy efficiency, confirming the EU’s leading role in sustainable finance. The full implementation in the coming years of all measures that can be financed through NGEU green bonds would provide a significant contribution to the EU’s green transformation, reducing greenhouse gas emissions by around 55 million tonnes per year within the Union. This represents 1.5% of total EU greenhouse gas emissions and is equivalent to the combined emissions of 15 million EU households or replacing 38 million internal combustion cars out of the EU’s 250 million cars with electric vehicles. These are the results of this year’s comprehensive analysis of the expected climate impact of NextGenerationEU green bond allocations published today in an annual report.
Green bonds are also an excellent opportunity for investors to be part of the solution: addressing the challenges of our generation and contributing to an environment in which our children can live is the highest return on investment.
The Commission launched a dedicated Green Bonds Dashboard in 2022 to provide full transparency on how the funding raised from NextGenerationEU green bonds is invested. It does this by providing a real-time overview of the relevant measures and expenditures that receive green bond financing. This data will further reassure investors that the Commission issues green bonds in line with the highest standards and best market practice.
Overall, the EU’s presence on capital markets has increased tenfold in just 5 years. Today, the total outstanding EU bonds have exceeded the half-trillion-euro mark.
In a volatile global environment, liquid and secure EU bonds add to the pool of safe euro-denominated assets and provide an opportunity to diversify risk.
The Commission will continue to report on the climate impacts of NextGenerationEU green bond allocations on an annual basis.
Under the NextGenerationEU instrument, at least 37% of the expenditure in Member States’ recovery and resilience plans will be used for sustainable investments and reforms in areas such as green infrastructure and renewable energy. Member States are required to report to the Commission on the implementation of climate-related measures, enabling the Commission to issue NGEU green bonds to finance these investments. The report provides a detailed update on the expenditure to be financed through the issuance of NGEU green bonds, and on the progress made in their implementation.
Green bond issuances are based on the NGEU Green Bond Framework. The Framework, adopted in September 2021, is aligned with the International Capital Markets Association’s Green Bond Principles, ensuring alignment with market standards on the use, management and reporting of proceeds.
The NGEU’s annual Green Bond Impact and Allocation Report is the main vehicle for communicating to investors and stakeholders on the use of proceeds and the climate impacts of investments financed by NGEU green bonds.
This edition of the report builds on previous NGEU Green Bond Allocation and Impact Reports. The information in the report is based on a cut-off date of August 1, 2024.