Implementing legal regulation for green bonds in Ukraine

This project was implemented for the National Securities and Stock Market Commission (NSSMC) between September 2021–March 2022 as part of the Good Governance Fund – Technical Assistance Facility: Eastern Partnership – UA 2005 project: Green Finance Project funded by UK International Development from the UK Government. The project is implemented by Abt Global and Abt Britain Ltd.

The client sought comprehensive legal support in developing the necessary legal framework in Ukraine to introduce “green bonds” as a modern and sustainable financing instrument that meet international standards. Successfully implementing this project created basis for attracting both domestic and foreign investors to finance green projects in Ukraine. Effective legal mechanisms were also provided to prevent greenwashing, securing an additional level of protection for investors in the green bond field.

• Analyse the applicability of existing green finance instruments for Ukraine’s energy sector.
• Prepare concepts for amendments to the NSSMC's regulations regarding corporate green bond issuance and reporting.
• Study relevant international experience in the European Union, the International Capital Markets Association (ICMA), and the Climate Bonds Initiative (CBI).
• Develop amendments to the NSSMC's regulations regarding corporate issuing and reporting green bonds, including verification.
• Promote process transparency through consultations with relevant authorities and key stakeholders.

By combining their expertise in financial, environmental, and capital markets laws, KPMG Law Ukraine's lawyers provided comprehensive support for the project, from analytics to regulatory changes. Specifically, our team performed the following services:

• Conducted an in-depth analysis of the current Ukrainian and EU legislations on green bond issuance and post-issuance reporting.
• Studied international practices and ICMA and CBI standards regarding the verification procedure.
• Organised a series of consultations with government agencies and international experts.
• Prepared draft amendments to the NSSMC's regulations regarding corporate green bond issuance and reporting.
• Developed a report on key legal gaps and opportunities for developing green finance instruments in Ukraine’s energy sector.

• Lack of an accepted activity taxonomy in Ukraine and technical criteria for project evaluation.

• Lack of a unified EU law regulating green bonds: draft EU legislation provided the basis for analyses, with these draft subsequently adopted in the course of the project. These changes influenced the nature of the expert analysis.

• Balance of interests: drafting regulation required taking into account and reasonably balancing the positions of businesses (bond issuers), the regulator, and potential verifiers.

• Regulation development took place under time constraints and during the beginning of Russia's full-scale invasion of Ukraine.

As part of project implementation, the KPMG Law Ukraine team provided comprehensive legal support to the NSSMC in developing regulations, in particular:

• “Regulation on the Procedure for the Issue of Corporate Bonds and their Circulation” No. 28/21/1105/K03 dated 6 September 2024
• “Regulation on Disclosure of Information by Issuers of Securities and Persons Providing Collateral for Such Securities” No. 608 dated 6 June 2023

This project provides an excellent example of effective cooperation between KPMG Law Ukraine and the regulator in order to make sure Ukrainian legislation is properly aligned with the leading European standards regarding green bonds. The established implementations strengthened local regulatory infrastructure, contributed to combatting greenwashing, and created the legislative preconditions to develop green initiatives and sustainable investments in Ukraine.

"The development of green bond regulations has become an important step towards Ukraine's integration into the global sustainable finance market. For the NSSMC, this project was more than just legal work – it was a strategic initiative that opened up new opportunities for both Ukrainian businesses and international investors. With the support of the UK, the KPMG Law Ukraine team, and other consultants, we managed to create a legal framework for issuing green bonds that meets international standards. We focused on transparency, reliable reporting, and protecting investor interests, which are all key elements in preventing greenwashing. Despite difficult circumstances, including the start of the full-scale Russian invasion of Ukraine, work on the project did not stop. This is a vivid example of resilience and professional interaction between the regulator, the expert community, and international partners," said Maksym Libanov, member of the National Securities and Stock Market Commission.

This project is an example of how the KPMG Law Ukraine team went beyond simply adapting legislation to international standards. Even under extremely adverse circumstances, we were able to lay the foundations for developing a sustainable finance market in Ukraine. Despite challenging conditions, the result was a set of working tools that really opened up opportunities for investors and minimised the risks of greenwashing.