Green bonds, government green light for economic and reputational sanctions

The European green bond regulation and the new rules included in the Tuf have as a fundamental objective to avoid the phenomenon of greenwashing. And Consob acts as the guarantor of transparency against this risk, ensuring that investors have certainty that the proceeds raised by the issuing company are actually used for the announced projects.

The EU green bond regulation is in fact much more stringent than the criteria set by the Icma, the international capital market association. In the latter case, in fact, there is a self-regulation code that is complied with by private and public entities; even European states have in fact already issued government bonds in compliance with the Icma criteria. The only sanction, however, is that of the market: if the company or state does not direct the proceeds towards the project indicated in the bond prospectus, the element of trust on the part of investors will be lost.

In the case of the EuGb, the acronym decided by Brussels for this type of bond, there are sanctions and an authority that continuously monitors. In fact, the issuing company or state in this case must publish an ex ante report on the projects to be financed. In addition to enclosing the certification of a third auditor who will validate the content of the document. In addition, a further progress report must be published every 12 months from the start of the operation. Finally, once the financed project is completed, an impact report will have to be published, which will have to provide a series of measurable environmental parameters and results of what has been achieved. Consob and the market will monitor all these steps.

In parallel with the changes to the Tuf, there are important novelties on the issuer side. The protagonist of these novelties is the Terna group, which on 3 February announced that it had 'completed the placement of a perpetual, subordinated, hybrid, non-convertible European Green Bond with a nominal value of EUR 850 million, intended for institutional investors,' reads a Terna note. This is the first issue in Italia of a green bond with such characteristics. "The bond," the statement explained, "is structured in a single tranche and pays a fixed annual coupon of 3.875 per cent" until 2 February 2032. From that date, if early redemption has not taken place, other mechanisms for calculating the annual interest will be applied to the bond.