Danish pensions and insurance industry association IPD is calling on the central bank to liaise with the country’s FSA over its planned inaugural green bond issuance, to make sure Danish pension companies will be able to invest in them.
The lobby group said it welcomed the EU’s proposed green bond standard (EUGBS), published yesterday, and reiterated that the upcoming Danish government green bonds should as far as possible be aligned with EU standards – and said the Danish central bank had already indicated this would be the case.
Tom Vile Jensen, deputy director of IPD, said: “In the ongoing work, we point out that Danmarks Nationalbank should enter into a dialogue with the Danish Financial Supervisory Authority, so we are sure that the Danish Financial Supervisory Authority does not see any barriers to, for example, Danish pension companies investing in green Danish government bonds.”
The bank has been working for some time on a model for national green bond issuance, using a format where the green premium is traded separately from the sovereign debt.
Vile Jensen said government green bonds could be priced to give a lower interest rate than their non-green counterparts, and said this should not in itself be an obstacle for Danish pension providers buying the new sovereign notes.
“Our industry has invested DKK25.7bn (€3.5bn) in green bonds, and we think there is huge potential,” he said.
In its regulation on a voluntary EUGBS, the European Commission has proposed four key requirements.
Firstly, it stipulates that funds raised should be allocated fully to projects aligned with the EU Taxonomy, and secondly that there must be full transparency on how the proceeds are allocated through detailed reporting requirements.
All EU green bonds will have to be checked by an external reviewer, to ensure compliance and that funded projects were aligned with its taxonomy – although the Commission says it foresees specific, limited flexibility here for sovereign issuers.
Fourthly, external reviewers providing services to issuers of EU green bonds will have to be registered with and supervised by the European Securities Markets Authority – though the Commission said it foresees flexibility here too for sovereign issuers.
IPD warned back in April that Denmark’s future green bonds had to live up to the EU’s standard.
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