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AFM: growth of sustainable bond market underlines the need for greater transparency

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The market for sustainable bonds in Europe is growing rapidly. Especially in the Netherlands, where the amount of sustainable bonds issued doubled in 2019, putting the country in the top 3. In its ‘Sustainable Bonds in the Netherlands’ report published today, 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 standardisation.

Summary

  • The market for sustainable bonds is growing rapidly
  • Greater attention to transparency is needed
  • The AFM argues for more standardisation

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. We are closely monitoring this development as part of our 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. 

Clarity is needed

This report on the sustainable bond market in the Netherlands is based partly on the cooperation of 20 major players in this market, including issuers, institutional investors and structuring banks. 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.

Journalists may contact Maarten Dijksma, AFM Press Officer, on 020-7972075 or maarten.dijksma@afm.nl.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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