92 NEWSLETTER 2021 by independent advisors who provide external review services to investors. These existing standards are set out with practice-based guidelines. However, there is no uniform and comprehensive definition of green projects. This prevents investors from readily identifying the bonds whose proceeds are in line with or contribute to achieving environmental goals. This also reduces the opportunity for issuers to transform their activities into more environmentally sustainable business models. In order to overcome these deficiencies, the European Green Deal document drew attention to the importance of ensuring a regular capital flow to green investments. The European Green Deal Investment Plan dated 14 January 2020 announced that the Commission would issue a Green Bond standard, and on 6 July 2021, the European Union Commission published the European Green Bond Standard RegulationDraft (“Draft”).6 This Draft aims, • To help investors to identify high quality Green Bonds, • To facilitate Green Bond issuance by explaining what green economic activities are and reducing potential reputational risks for bond issuers, • To uniformize supervision and review practices and to increase confidence in external review by introducing a voluntary registration and review regime.7 The Draft is aligned with the Taxonomy Regulation of the European Union.8 The Taxonomy Regulation is used as a criterion to classify an economic activity or project as a green project or activity. According to Article 4 of the Taxonomy Regulation, the European Union shall use the criteria of the Taxonomy Regulation when setting standards for economically sustainable bonds. For this reason, the European Union Commission has argued that the Taxonomy Regulation 6 Proposal for a Regulation of The European Parliament and of The Council on European green bonds. https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52021PC0391 (Access date: 23.01.2022). 7 https://ec.europa.eu/commission/presscorner/detail/en/QANDA_21_3406 (Access date: 23.01.2022). 8 https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en (Access date: 23.01.2022).
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