On 23 April 2020, the Autoriteit Financiële Markten (AFM) published a report on Sustainable Bonds in the Netherlands.
22 May 2020
The market for sustainable bonds in Europe is growing rapidly. Especially in the Netherlands, where the amount of sustainable bonds issued doubled in 2019.
In its ‘Sustainable Bonds in the Netherlands’ report, the AFM supports this positive development for the transition to a sustainable economy. However, the AFM also notes the importance of transparency in prospectuses, reporting of relevant non-financial information and standardization.
The transition into a sustainable economy, the large investments needed and increasing demand for instruments such as green bonds are driving the growth in sustainable bonds. This is a market that the AFM expects to continue to grow rapidly in the coming years. The AFM is closely monitoring this development as part of its ongoing supervision of the capital markets. The aim of this report is to gain a better understanding of this growth market and to identify risks that could be taken into account by the AFM in its supervision.
One of the conclusions is that the sustainable bond market currently features a variety of standards. The AFM argues that greater standardisation is needed, and accordingly supports the proposals of the European Commission, for instance for an EU Green Bond Standard.
With regard to prospectus supervision, the AFM is striving for more transparency concerning information such as the use of proceeds, allocation and impact reporting. Among other things, this could help to prevent ‘greenwashing’.
Transparency is also needed in the reporting of relevant non-financial information. The AFM accordingly calls on issuers to be more specific and go into greater detail in their annual reporting. Transparency benefits all the parties involved and will have a positive effect on the market.
This article was originally published in the April edition of REGWATCH. Read the full edition covering the following jurisdictions:
- European Union
- Hong Kong
- United Kingdom