The European Union's journey with NextGenerationEU (NGEU) Green Bonds has been nothing short of remarkable. More than three years since the first transaction, the EU has achieved a significant milestone by issuing more than €65 billion of these green bonds. This puts the EU on a path to becoming the largest issuer globally in this domain.
Investing in a Sustainable Future
In line with President von der Leyen's 2020 State of the Union address, the European Commission is committed to issuing 30% of NextGenerationEU financing through Green Bonds. These NGEU Green Bonds are expected to drive €264.6 billion in green investments across nine crucial sectors. For instance, in clean transport, clean energy, and energy efficiency, they are solidifying the EU's leading position in sustainable finance. The full implementation of measures funded by these green bonds in the coming years will have a profound impact. It is estimated to reduce GHG emissions by approximately 55 million tons per year within the Union. This is equivalent to 1.5% of all EU GHG emissions and is comparable to the combined emissions of 15 million EU households or replacing 38 million of the 250 million internal combustion cars with electric vehicles.Green Bonds offer investors a unique opportunity. They become part of the solution by tackling the challenges of our generation and creating an environment where our children can thrive. It is truly the highest return on investment.The Commission launched a dedicated Green Bond Dashboard in 2022. This dashboard provides full transparency on how the financing from NGEU green bonds is invested. It offers a real-time overview of the measures and related expenditures that receive funding. This data reassures investors that the Commission is issuing green bonds in accordance with the highest standards and best market practices.Overall, the EU's presence in the capital markets has witnessed a remarkable tenfold increase in just 5 years. Today, the EU's total bonds outstanding have surpassed the half-trillion Euro mark. In a volatile global environment, liquid and safe collateral EU bonds enhance the pool of safe euro-denominated assets and provide an avenue to diversify risks.Next Steps and Background
The Commission will continue to provide annual reports on the climate impacts of NGEU Green Bonds allocation. Under the NGEU instrument, at least 37% of spending in Member States' Recovery and Resilience Plans will be dedicated to sustainable investments and reforms. Member States are required to report to the Commission on the implementation of climate-relevant measures, enabling the Commission to issue NGEU Green Bonds. This report provides a detailed update on the expenditures to be financed through NGEU Green Bond issuance and the progress in their implementation.NGEU Green Bond issuances are supported by the NGEU Green Bond framework. Adopted in September 2021, this framework aligns with the Green Bond principles of the International Capital Market Association, ensuring consistency with market standards in the use, management, and reporting of proceeds.The annual NGEU Green Bonds Impact and Allocation report is the primary means of communicating with investors and stakeholders about the use of proceeds and the climate impacts of NGEU Green Bond-financed investments. This edition builds on previous reports and is based on a cut-off date of 1 August 2024.Source: European Commission