Spain Is the Opening Act for the EU’s Big Green Autumn

The bloc could have stronger standards for its climate-friendly bonds but it is still providing a beacon for companies anxious for leadership.

He talks to media about an independently evaluated Green Bond framework, thus taking a step forward towards the issuance of up to 250 billion green bonds, or 30% of NextGeneration EU's total issuance.
By Marcus Ashworth
September 08, 2021 | 09:26 AM

Bloomberg Opinion — By Marcus Ashworth

Nothing says the European summer is over and business is restarting like a blowout sovereign bond sale. Tuesday’s inaugural green bond launch for the Kingdom of Spain certainly fits that bill. The 5 billion-euro ($6 billion) 21-year deal received orders well over 10 times what was on offer. Investors just cannot greenify their portfolios quickly enough. But this is just the first course of what’s on offer for EU green bond issuance come autumn.

Leaving aside the U.K.’s inaugural green Gilt due later in the month — after all, it is no longer part of the bloc — the real focus will be on the European Union itself which is fast becoming the world leader on green finance. Indeed, London has some catching up to do.

EU Budget Commissioner Johannes Hahn confirmed Tuesday that green bonds will form part of the bloc’s 800 billion-euro NextGeneration EU recovery fund bond sales from October. That means over the next half-decade some 250 billion euros of green-labeled debt will be sold — 30% of the EU Commission’s total — putting it firmly on course to be the biggest global green issuer.


Not every issuer gets it right so the EU’s standards will be important. How does it avoid allegations of greenwashing? So far, it has adopted norms established by the International Capital Markets Association; it will likely combine these with recommendations on climate-related financial disclosures and for voluntary carbon markets set up by task forces ahead of the United Nations climate change COP26 summit in Glasgow, Scotland in November.

It is still far from clear what is truly green or what is just painted a nicer shade of aquamarine. And there’s a crowded field of virtuous regulatory bodies offering their own visions of environmental rectitude. The tricky bit is choosing the organization to be arbiter of best practices. As with Spain’s new green bond, the EU is using the methodology of Moody’s Investors Service ESG solutions unit Vigeo Eiris. This doesn’t mean it necessarily becomes the sole standard. Corporations, as suits them, are picking and choosing between different guidance — especially for sustainability-linked bonds that come with green strings attached.

The EU could have set a precedent with stronger industry standards from the start — if only to show its willingness to suffer the consequences if it falls short of its ambitions. Still it is an important start and is a beacon for businesses eager for leadership. Indeed, nearly half of the new bond sale mandates announced this week in Europe and the U.K. have been green. That in itself is progress.


This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently