Sustainable finance: the AMF and AFM publish a common position on the content of the prospectus for green bonds
The French and Dutch financial market supervisory authorities advocate a regulation allowing a greater transparency towards investors in order to allow the development of the green bond market in the European Union.
As part of its action plan for sustainable finance, the European Commission announced its intention to define the content of the prospectus for green bond issuances by the end of the second quarter of 2019. As these types of issuances represent a financing tool for projects in favour of the energy transition and are subject to a strong investor interest, the Autorité des Marchés Financiers (AMF) and the Autoriteit Financiële Markten (AFM) wish to contribute to the ongoing European debate. Sustainable finance is indeed a priority for these authorities.
For the AMF and AFM, the prospectus that will be used for green bonds must enable investors to make an informed decision while allowing the green bond market to develop.
The position paper, which was sent to the European Commission, states that if an issuer chooses to qualify its bond issuance as ‘green’, the prospectus should include additional information regarding the use of proceeds, the selection of funded projects and the management of proceeds. The issuer should also specify whether it intends:
- to comply with green bond standards;
- to publish a reporting on the use of the green bond proceeds; or
- to mandate a third party verification.
This additional information in the prospectus, while remaining reasonable for green bond issuers, would help to enhance transparency and therefore investor confidence, which is essential for the development of the European green bond market.
The AMF has made sustainable finance a building block of its five-year vision (« #Supervision 2022 »), thereby recognising the underlying trend at play in the industry as well as the expectations of a growing number of stakeholders. In its Roadmap on sustainable finance, published in November 2018, the AMF committed to participating in European regulatory work and collaborating with other regulators, to create the appropriate regulatory framework.
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