Commission draft Delegated Regulation to the EU Prospectus Regulation – disclosures for ESG Bonds

Background

The EU Listing Act, amending the EU Prospectus Regulation (“EU PR”), entered into force in December 2024. However, certain amendments which were reliant on delegated acts, were scheduled to be phased in; this includes, in particular, prospectus disclosure requirements for bonds “advertised as taking into account ESG factors or pursuing ESG objectives”, which are intended to take effect from 5 June 2026.

Draft Delegated Regulation 

Further to technical advice from the European Securities and Markets Authority (“ESMA”) contained in its Final Report on technical advice concerning the PR (“Final Report”),  (for more on ESMA’s Final Report, see here), on 11 February 2026 the Commission published its draft Delegated Regulation (the “DR”) amending Delegated Regulation (EU) 2019/980 as regards the standardised format and sequence and the streamlined content, scrutiny and approval of the prospectus. This draft DR is open for comment for a period of 4 weeks ending on 11 March 2026 and represents the near final stage in the legislative process.

What is the Commission proposing for ESG Bonds?

There is a new Article 23a to the DR relating to non-equity securities “advertised as taking into account ESG factors or pursuing ESG objectives” (“ESG Bonds”), which includes use of proceeds bonds as well as sustainability-linked bonds. This will require additional information to be included in the prospectus in accordance with a new Annex 22a (the “ESG Disclosure Annex”).  

The ESG Disclosure Annex is intended to be used as a building block in combination with other disclosure annexes applicable to non-equity securities. The Commission’s proposal uses the recommendations from ESMA’s Final Report as its starting point (which in turn were informed by ESMA’s Public Statement of July 2023 on sustainability disclosures expected to be included in prospectuses drawn up in compliance with the PR (the “Statement”, for more on the Statement, see our blog post here)), with amendments reflective of stakeholder feedback. As with ESMA’s Final Report, the Commission’s proposed ESG Disclosure Annex includes items which go beyond the ESMA Statement. 

Requirements for all ESG Bonds 

Pursuant to the ESG Disclosure Annex, all issuers of ESG Bonds will be required to include a clear explanation in the prospectus to help investors understand the ESG factors taken into account or the ESG objectives pursued by the non-equity securities. This explanation should be unambiguous and fact-based. 

Where an ESG Bond is advertised as:

• aligned with, eligible under or otherwise adhering to the EU taxonomy, the prospectus must clearly state which percentage of the proceeds will be allocated to activities compliant with the EU taxonomy;

• compliant with, eligible under or otherwise adhering to a categorisation system other than the EU taxonomy laying down criteria determining whether an economic activity qualifies as environmentally sustainable, the prospectus must:

  • clearly (i) identify the third-party categorisation system, (ii) state that it is not the EU taxonomy and (iii) state which percentage of the proceeds will be allocated to economic activities aligned with the third-party categorisation system;

  • clearly describe how the third-party categorisation system ensures the economic activities substantially contribute to certain environmental objectives; and

  • include a hyperlink (with disclaimer that the website information does not form part of the prospectus unless incorporated by reference in accordance with the EU PR) to the following (as applicable): (i) technical screening criteria, (ii) do no significant harm principles and (iii) minimum social safeguards of the categorisation system. If such third-party categorisation system does not include any of items (i) to (iii) the issuer is to clearly state this fact; 

• compliant with, eligible under or otherwise adhering to a specific market standard or label requirements relating to the ESG factors taken into account or the ESG objectives pursued by the ESG Bond, the prospectus must (i) identify the market standard or label and (ii) include a hyperlink to the disclosures relating to that market standard or label (e.g. an applicable framework) and to general information about such market standard or label, with a disclaimer that the website information does not form part of the prospectus unless incorporated by reference in accordance with the EU PR.

Disclosures for UoP bonds

In relation to use of proceeds (“UoP”) bonds, the prospectus must include a description of (i) the intended share of the proceeds to be allocated to the sustainable projects and activities, (ii) the goal and characteristics of the relevant sustainable projects and activities to be financed, and the criteria used  to determine they are sustainable and (iii) any permissible deviations from such allocation. Where sustainable projects or activities are not identified at the time a prospectus is approved, disclosure regarding the criteria to be used to identify relevant projects is required. 

If the proceeds of ESG Bonds will be used to purchase sustainable loans or assets, issuers must disclose the criteria used to determine their sustainability, including whether such loan or asset complies with, is eligible under or adheres to the EU taxonomy or a third-party classification system.

Disclosures for SLBs 

For sustainability-linked bonds (“SLBs”), the prospectus must include a description of any financial features (such as interest or premium payments) impacted by the issuer achieving or failing to achieve the relevant ESG objectives, including how those amounts are calculated. This disclosure must explain the key performance indicators (“KPIs”) and the sustainability performance targets (“SPTs”) selected and contain their calculation methodologies. The prospectus must also include information enabling investors to assess consistency of the KPIs and related SPTs with any relevant sector-specific science-based targets and the issuer’s sustainability strategy. Where the SLB includes early redemption provisions, disclosure on the impact this may have on the sustainability performance of the investment is also required.

Disclosures for Structured ESG Bonds

If an ESG Bond is linked to an underlying that is material for assessing the ESG factors or ESG objectives, the prospectus must include additional disclosures, including a description of the underlying with an explanation of how its use is compatible with the sustainable characteristics that the bond promotes or with the objectives of sustainable investment. Additional disclosures apply where the underlying is an ESG benchmark. If the structured ESG bond would not qualify as a UoP bond, the prospectus must include a statement that such bond does not represent a direct investment in a sustainable product or economic activity. 

Requirement to disclose if the issuer intends to provide post-issuance information 

The Commission has adopted ESMA’s advice to introduce a requirement to disclose if the issuer will provide post-issuance information and if so where it can be found (as a reminder, this was a recommendation made in the ESMA Statement). Note that this disclosure item does not compel such publication of post-issuance information (as post-issuance disclosure is out of scope of the EU PR). 

Disclosure of ESG Ratings 

Where an issuer chooses to use ESG ratings assigned to its ESG Bond, the prospectus must include a hyperlink to those ratings, together with a disclaimer that the website information does not form part of the prospectus unless incorporated by reference in accordance with the EU PR. By way of reminder, the EU ESG Ratings Regulation will apply from 2 July 2026, marking an important milestone in the international supervision and regulation of ESG ratings providers.

Interaction between the ESG Disclosure Annex and the EuGB Regulation

The requirements of this proposed ESG Disclosure Annex will apply to all ESG Bonds subject to the EU PR except for bonds issued in accordance with the EU Green Bond Regulation (“EuGB Regulation") (either in relation to bonds issued in compliance with the full “European Green Bond" label or those where the issuer has chosen to adopt the voluntary pre-issuance disclosure templates under the EuGB Regulation) provided, in each case, that the applicable conditions of Article 13(1a) of the EU PR regarding disclosure of 'relevant information' from the factsheet or voluntary templates are met.  This is welcome, and  addresses concerns about creating overlapping or  duplicative disclosure obligations for EuGB Regulation issuances. 

Timings

The consultation on the DR is open for a 4-week consultation until 11 March 2026. The provisions of this DR are expected to apply from 5 June 2026 in accordance with the amendments to the EU PR made pursuant to the EU Listing Act in 2024. 

Transitional provisions under the EU PR mean that these changes will not apply to prospectuses approved before 5 June 2026, including base prospectuses (see Art. 48a EU PR and ESMA’s latest statement from 18 February 2026).