Luxembourg Financial Regulatory News:
This Explanation is designed to review your understanding of Commission Delegated Regulation (EU) 2025/753 in Luxembourg, which supplements Regulation (EU) 2023/2631 concerning voluntary disclosures for environmentally sustainable bonds and sustainability-linked bonds.
Read more about Commission Delegated Regulation (EU) 2025/753 in Luxembourg, which supplements Regulation (EU) 2023/2631 at the official link at https://www.cssf.lu/en/Document/commission-delegated-regulation-eu-2025-753-of-16-april-2025/
I. Key Concepts and Purpose of the Commission Delegated Regulation (EU) 2025/753 of 16 April 2025 in Luxembourg
- Primary Objective: To establish the content, methodologies, and presentation of information to be voluntarily disclosed by issuers of bonds marketed as environmentally sustainable or sustainability-linked bonds using common templates for periodic post-issuance disclosures.
- Relationship to Parent Regulation: This Delegated Regulation supplements Regulation (EU) 2023/2631 (European Green Bonds and optional disclosures for other sustainable bonds), specifically Article 21(4) thereof.
- Voluntary Nature: Issuers are not obligated to use these common templates, but if they choose to, they must follow them. They remain free to disclose additional information.
- Consistency and Comparability: The regulation aims to ensure consistency and comparability between pre-issuance and post-issuance disclosure templates, as well as with disclosures for European Green Bonds, to facilitate investor use and increase transparency.
- Transparency and Standardization: By providing clarity and encouraging the take-up of these templates, the regulation seeks to enhance transparency and standardization in the sustainable bond market.
II. Scope and Application of the Commission Delegated Regulation (EU) 2025/753 of 16 April 2025 in Luxembourg
- Applicable Bonds: Bonds marketed as environmentally sustainable and sustainability-linked bonds.
- Issuers: Issuers of the aforementioned bond types who choose to use the common voluntary templates for post-issuance disclosures.
- Post-Issuance Disclosures: Focus is on information disclosed after the bond issuance.
III. Key Provisions and Requirements of the Commission Delegated Regulation (EU) 2025/753 of 16 April 2025 in Luxembourg
- Article 1: Templates for Voluntary Post-Issuance Disclosures: Mandates the use of templates set out in the Annex for issuers who opt for voluntary disclosures.
- Allows one template to relate to more than one bond issuance.
- Article 2: Frequency of Disclosing: Environmentally Sustainable Bonds: Disclosures for each 12-month period until full allocation of proceeds.
- Sustainability-Linked Bonds: Disclosures for each 12-month period until the last sustainability-target observation.
- Start Date: The first 12-month period begins on the issuance date.
- End Date Flexibility: Issuers can set the end date of the first reporting period as the last day of the calendar or financial year of issuance.
- Reporting Deadlines: With external review: within 270 days of the end of the 12-month period.
- Without external review: within 150 days of the end of the 12-month period.
- Article 3: Publication on Issuers’ Websites: Medium: Disclosures must be published on the issuer’s website.
- Availability: Must be available, free of charge, for at least 12 months after bond maturity.
- Language Requirements: Choice of a language customary in international finance, OR
- Language accepted by the competent authority of the Member State(s) where bonds are offered/traded.
- Derogation: If a prospectus exists under Regulation (EU) 2017/1129, the language(s) of that prospectus must be used.
- Article 4: Corrections: Requires immediate updating and publication without undue delay if the allocation of proceeds is corrected after original publication.
- Article 5: Notification to Competent Authorities and Means of Communication: Notification Obligation: Issuers must electronically notify competent authorities without undue delay after publication of disclosures or updates.
- Information to Notify: Publication of information, publication of updates, and the hyperlink to the published information.
- Contact Point: Competent authorities must create a contact point for these notifications.
- Article 6: Entry into Force: Entered into force on the twentieth day following its publication in the Official Journal of the European Union.
- Binding in its entirety and directly applicable in all Member States.
IV. Annex: Disclosure Templates
The Annex provides detailed templates for both types of bonds, covering:
- General Information: Issuance dates, publication dates, reporting periods, issuer’s legal name and LEI, contact/website details, bond name/ISIN, external reviewer details (if applicable), competent authority for prospectus (if applicable).
- Environmental Strategy and Rationale: Environmentally Sustainable Bonds: Environmental objectives (per Regulation (EU) 2020/852), link with taxonomy-alignment KPIs (turnover, CapEx, OpEx), link to transition plans.
- Sustainability-Linked Bonds: Bond characteristics (rationale, ambition, KPI materiality, calculation, progress), external review of KPIs, link to taxonomy-aligned turnover/CapEx/OpEx, bond structure (coupon adjustment mechanism), environmental objectives, link to transition plans.
- Allocation of Bond Proceeds (Environmentally Sustainable Bonds only): Level of detail (economic activity, project, or group of projects).
- Allocation approach (gradual or portfolio).
- Proportion of taxonomy-aligned proceeds.
- Specifics for sovereign issuers.
- Tables A (gradual approach) and B (portfolio of assets) with detailed requirements on project specifics, allocated amounts, financing/refinancing shares, economic activity types, taxonomy alignment details, environmental objectives, technical screening criteria, nature of assets/expenditure, and non-taxonomy-aligned proceeds.
- Exclusions (e.g., activities under Commission Delegated Regulation (EU) 2020/1818).
- Optional Environmental Impact (Environmentally Sustainable Bonds only): Description of environmental impacts (metrics like GHG emissions avoided, renewable energy capacity).
- Information on Reporting: Links to issuer’s website and relevant reports (e.g., consolidated management/sustainability report).
- Other Relevant Information.
V. References to Other EU Regulations/Directives in the Commission Delegated Regulation (EU) 2025/753 of 16 April 2025 in Luxembourg
- Regulation (EU) 2023/2631 (Parent Regulation on European Green Bonds and optional disclosures)
- Treaty on the Functioning of the European Union
- Regulation (EU) 2017/1129 (Prospectus Regulation)
- Regulation (EU) 2020/852 (EU Taxonomy Regulation)
- Directive 2013/34/EU (Annual financial statements, consolidated financial statements and related reports)
- Commission Delegated Regulation (EU) 2020/1818 (EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks)
- Commission Delegated Regulation (EU) 2021/2178 (Taxonomy disclosure methodology)
- Regulation (EC) No 1893/2006 (NACE statistical classification of economic activities)
Glossary of Key Terms with Definitions
- Commission Delegated Regulation (EU) 2025/753: The specific legal act discussed in the source material, supplementing Regulation (EU) 2023/2631 by establishing disclosure requirements for sustainable bonds.
- Regulation (EU) 2023/2631: The parent regulation that Delegated Regulation (EU) 2025/753 supplements, concerning European Green Bonds and optional disclosures for other environmentally sustainable and sustainability-linked bonds.
- Bonds Marketed as Environmentally Sustainable: Financial instruments where the proceeds are intended to be used for projects or activities that have positive environmental impacts.
- Sustainability-Linked Bonds (SLBs): Financial instruments where the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability/environmental performance targets.
- Post-Issuance Disclosures: Information provided by bond issuers after the bond has been issued, detailing how the bond proceeds are being used and their impact, or progress towards sustainability targets.
- Voluntary Disclosure: The act of an issuer choosing to make information public, rather than being legally mandated to do so. In this context, using the common templates is voluntary.
- Common Templates: Standardized formats provided in the Annex of the regulation for issuers to use when making voluntary periodic post-issuance disclosures.
- External Review: An independent assessment or verification of an issuer’s disclosures, often conducted by a third-party expert.
- Allocation of Proceeds: The process by which the funds raised from a bond issuance are distributed to various projects, activities, or assets.
- Taxonomy-Aligned Economic Activities: Economic activities that meet the criteria established by Regulation (EU) 2020/852 (EU Taxonomy Regulation) for contributing substantially to one or more environmental objectives without significantly harming others.
- Key Performance Indicators (KPIs): Measurable values that demonstrate how effectively an issuer is achieving key business or sustainability objectives. Relevant for sustainability-linked bonds.
- Sustainability Performance Targets (SPTs): Specific, measurable, achievable, relevant, and time-bound goals related to an issuer’s environmental or social performance, linked to sustainability-linked bonds.
- Competent Authority: A national public authority or body designated by a Member State to oversee and enforce specific financial regulations.
- Prospectus: A formal legal document required by securities regulators, providing details about an investment offering for sale to the public. Referred to in Regulation (EU) 2017/1129.
- Official Journal of the European Union: The official gazette of record for the European Union, where all EU legal acts are published.
- Legal Entity Identifier (LEI): A 20-character alphanumeric code that uniquely identifies legally distinct entities that engage in financial transactions.
- International Securities Identification Number (ISIN): A 12-character alphanumeric code that uniquely identifies a security, such as a bond.
NACE codes: A statistical classification of economic activities used in the European Union, facilitating the collection and presentation of statistical data.
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The pre-filled example templates for multiple CSSF Circulars and EU regulations applicable to small to medium sized financial institutions in Luxembourg should be available at https://ratiofy.lu/templates/ from Christmas 2025.
