Consultation for External Reviewers
The European Securities and Markets Authority (ESMA) releases a consultation for external reviewers of Regulation on European Green Bonds, aimed at soliciting opinions from market participants on the external reviewer mechanism.
The Regulation on European Green Bonds came into effect in December 2024, and the European Securities and Markets Authority is the creator of Regulatory Technical Standards and Implementing Technical Standards.
Related Post: European Securities and Markets Authority Releases Consultation Paper on European Green Bond Regulation
Introduction to Consultation for External Reviewers
The consultation for external reviewers of Regulation on European Green Bonds includes the following parts:
- Systems, resources and procedures: External reviewers should have access to systems, resources and procedures to work effectively. Systems refer to communication networks, infrastructure, and organizational frameworks, resources refer to finance, talent, technology, and intellectual property, and programs refer to standardized steps in daily work. Regulatory agencies will conduct suitability, adequacy, and effectiveness assessments of external reviewers annually to ensure their compliance with requirements.
- Compliance function: External reviewers should independently perform their duties and have the necessary resources and expertise. These compliance features can identify, prevent, and respond to violations, and avoid external interference. Regulatory agencies will evaluate the standards for fulfilling their responsibilities and whether they have sufficient resources and knowledge.
- Internal policies and procedures: External reviewers should establish complete administrative, accounting, and internal control mechanisms to make effective decisions, improve business continuity, and data integrity. Regulatory agencies will evaluate internal policies and procedures to ensure compliance with standards.
- Information used for reviews: External reviewers should use high-quality and reliable information to conduct evaluations in a consistent, measurable, and documented manner, to increase market participants’ trust in green bonds. Regulatory agencies will evaluate whether this information meets the requirements.
- Application for recognition: Before conducting business in the European Union, external reviewers from third countries need to comply with the recognition of the European Securities and Markets Authority to reduce the applicant’s compliance costs. The specific recognition standards will be formulated by regulatory agencies.
- Material changes to registration: External reviewers need to notify the European Securities and Markets Authority before making material changes to ensure continued compliance with regulatory requirements.
The European Securities and Markets Authority welcomes market participants to provide feedback by June 2025 and plans to officially release a report in the fourth quarter and submit formal Regulatory Technical Standards and Implementing Technical Standards by December.
Reference:
ESMA Consults on Rules for External Reviewers of European Green Bonds
