Only 23% of the EU stock of green and sustainability bonds can claim alignment with the Green Bond Standard (GBS), which will become effective in December. New research published by sustainability and impact data provider MainStreet Partners noted that one of the key requirements to meet the GBS is for proceeds from fundraising to be allocated to projects aligned with the EU Taxonomy. Yet average alignment for assessed green bonds was 62%, while it was 21% for sustainability bonds. In total, assessed bonds represented approximately US$700 billion in assets. “Only 23% of the current stock of green and social bonds can claim accordance with the EU GBS,” said Pietro Sette, Research Director at MainStreet Partners. “This is expected to increase as both issuers and investors progressively realise the added benefits of the label, such as smoother compliance with regulation and lower reputational risk.” Eighty-three percent of GBS-eligible bonds were issued by European entities, such as Germany and France. Meanwhile, Asia-based issuers represented 9% of the eligible volume – which MainStreet Partners largely attributed to a partial overlap of local environmental taxonomies with EU requirements. From a sectoral perspective, the data provider expected manufacturing to play an “outsized positive role” in GBS-eligible bonds, representing around 5% of the total average alignment, compared to non-EU eligible bonds.
