Negotiators from the European Parliament and the Council of the EU failed to reach an agreement on ‘European green bonds’ during their fourth meeting on Wednesday, 14 December.
In the end, a compromise—which, however, seemed “possible” the day before (see EUROPE 13083/28)—was not found between the ‘flexibility pocket’ that the EU Council wanted and the market-based transparency that the European Parliament desired.
This ‘pocket’ would allow sovereign issuers to include a certain amount of expenditure as proceeds in their European green bonds that has a positive environmental impact, but this is not in line with the taxonomy.
“[The EU] Council wanted a ‘flexibility pocket’ and ended up [being] unwilling to give in on transparency”, explained a European source, who was contacted by EUROPE on Thursday, 15 December. According to this person, the Council of the EU put pressure on transparency requirements for ‘brown assets’—which significantly undermine environmental objectives—in securitised exposures.
The EU Council “wanted more leniency on ‘grandfathering’ (how long old taxonomy rules can still be used when new ones are published)”, the individual explained.
“It felt like they wanted the European Parliament to give in on a lot, without being able to bring anything to the table”, the source said.
The negotiators will meet after the Christmas holidays. (Original version in French by Anne Damiani)