Sustainable finance and "green" claims

🧔 Adult What the law says. Regulation (EU) 2019/2088 (SFDR), Article 2(17), defines a "sustainable investment" as an investment in an economic activity that contributes to an environmental or social objective, provided that it does not significantly harm any of those objectives and that the investee companies follow good governance practices — in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance ✔.

The same regulation defines:

• "sustainability risk" (Article 2(22)) — an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment ✔;
• "sustainability factors" (Article 2(24)) — environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters ✔.

The two ideas are different. Sustainability risk is how the world affects the value of the investment (for example a flood, or a new charge on emissions). Sustainability factors are how the investment affects the world. The EU/OECD-INFE framework expects an adult to tell the two apart (competences 401–402, chapter 9).

What is NOT defined. The words "green", "ethical", "responsible", "sustainable" in advertising have no general definition. Only the terms in specific acts (SFDR, the Taxonomy, Directive 2024/825) are defined.

Myth → truth

• Myth: "If it's ESG, it's safe or it pays more."
• Truth: ESG describes characteristics and objectives; it does not promise a result. The link with risk and return is in chapter 9.

Who profits? Whoever can ask "what exactly does this mean for you?" and get an answer backed by a document.

Scene for 3D: a team in a three-colour kit — green, blue, gold. The child sees how missing one colour changes the game.

→ Continue at the source

• European Commission — overview of sustainable finance: https://finance.ec.europa.eu/sustainable-finance/overview-sustainable-finance_en ✔

Sources

• ✔ Regulation (EU) 2019/2088, Article 2(17), (22), (24) — OJ L 317, 9.12.2019, p. 1: http://data.europa.eu/eli/reg/2019/2088/oj (accessed 2026-10-19; text obtained from the Publications Office of the EU).
• ✔ European Commission, "Overview of sustainable finance": https://finance.ec.europa.eu/sustainable-finance/overview-sustainable-finance_en (accessed 2026-10-19).

🧔 Adult Formula for the "payback" of an improvement. Payback period (years) = upfront cost ÷ annual saving The saving is an assumption — it depends on energy prices, on habits and on the state of the building. That is why you ask an independent specialist for an assessment and compare it with your reserve (Module 8, The iron principles of cash flow). Do not put money into an improvement if you need that money to stay available.

What the total cost of ownership (TCO) includes: price + years of use × running costs − residual value. This is how you compare two things with different purchase prices.

Public programmes. The European Union and national budgets sometimes offer grants or subsidised loans for energy renovation. The conditions (who may apply, deadlines, the share you pay yourself) change — check them only on the website of the body that manages the programme.

Example: Bulgaria — programmes and information are published by: - the Ministry of Regional Development and Public Works — energy efficiency programmes for buildings ✔ (the ministry's site has an "Energy efficiency" section; the conditions are on each programme's page): https://www.mrrb.bg - the information system for managing and monitoring EU funds in Bulgaria: https://www.eufunds.bg ✔ - the National Decarbonisation Fund — loans and guarantees for energy efficiency (the site also mentions the Energy Efficiency and Renewable Sources Fund) ✔: https://www.bgeef.com

Check in your country — look for the ministry or agency responsible for energy or housing, your country's portal for EU funds, and any national energy efficiency fund. Read the conditions on the managing body's own page, on the day you apply.

Green loans. Some lenders offer products linked to energy efficiency (a "green" mortgage, a consumer loan for home improvement). The EU/OECD-INFE framework expects an adult to know that such products exist (293). The same rules apply as for any loan: APR, term, fees, collateral (see Module 22, Credit). The word "green" in the name of a loan is no guarantee of a lower price.

Climate risk for the home. Flood, fire, hail and drought are risks with financial consequences. Whether they are covered is a matter of contract — see Module 12 (Insurance), chapter 7 (property) and competences 392–393.

Myth → truth

• Myth: "Sustainable is always more expensive."
• Truth: sometimes it is more expensive at the start and cheaper over the years; sometimes it is not. You work it out for the specific case.

Who profits? Whoever calculates the full cost and compares it with the alternative, instead of following a label.

Scene for 3D: a house with transparent walls. The child sees where the heat "leaks" out and how many years each option takes to pay for itself.

→ Continue at the source

• European Commission — energy efficiency of buildings ✔: https://energy.ec.europa.eu/topics/energy-efficiency/energy-efficient-buildings_en

Sources

• ✔ EU/OECD-INFE financial competence framework for adults, 2022, competences 68, 100–103, 293, 392–393: ramki/EU-OECD-INFE_Financial-competence-framework-adults_2022_EN.txt (accessed 2026-10-19).
• ✔ The sites mrrb.bg, eufunds.bg, bgeef.com and the Commission's page on energy-efficient buildings were opened on 2026-10-19. The conditions of all programmes are checked on the managing bodies' pages on the day of publication.

🧔 Adult What the act is. Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment — OJ L 198, 22.6.2020, p. 13 ✔.

What it is for (Article 1(1)). It "establishes the criteria for determining whether an economic activity qualifies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable" ✔.

Whom it binds (Article 1(2)). Measures of the Member States and of the Union on financial products or corporate bonds made available as environmentally sustainable; financial market participants that make financial products available; and undertakings required to publish a non-financial statement ✔. The Taxonomy does not tell consumers what to buy.

The four conditions (Article 3). An activity is environmentally sustainable when it:

1. contributes substantially to one or more of the environmental objectives in Article 9;
2. does no significant harm to any of the objectives in Article 9 (Article 17);
3. is carried out in compliance with the minimum safeguards in Article 18;
4. complies with the technical screening criteria set by the Commission ✔.

The six environmental objectives (Article 9): (a) climate change mitigation; (b) climate change adaptation; (c) the sustainable use and protection of water and marine resources; (d) the transition to a circular economy; (e) pollution prevention and control; (f) the protection and restoration of biodiversity and ecosystems ✔.

Article 4: the criteria in Article 3 apply when Member States or the Union set requirements for financial products or corporate bonds made available as environmentally sustainable ✔.

How to read it. The Taxonomy is a tool for classifying activities, not a rating of a company and not an approval of a product. It says "this activity meets the criteria", not "this company is good". A "Taxonomy-aligned" share in a portfolio shows how much of the turnover, investment or expenditure is in activities that meet the criteria. It is not a goal in itself and not a measure of return.

What the Taxonomy is not. It is not a "green/brown" list for everything. An economic activity outside the list is not necessarily harmful — it may simply not be described yet, or not meet the criteria. There is no social taxonomy in this regulation.

Myth → truth

• Myth: "The product is in the Taxonomy, so it's safe."
• Truth: the Taxonomy describes activities. For a product, ask: what share of it is in such activities, and how is that measured?

Who profits? Everyone who can compare like with like — one language for all.

Scene for 3D: a wardrobe with drawers and four locks (one for each condition). The child tries to open a drawer with three keys out of four.

→ Continue at the source

• EUR-Lex, Regulation (EU) 2020/852: http://data.europa.eu/eli/reg/2020/852/oj ✔

Sources

• ✔ Regulation (EU) 2020/852, Articles 1, 3, 4, 9, OJ L 198, 22.6.2020, p. 13 (accessed 2026-10-19).
• ✔ Delegated Regulation (EU) 2021/2139 (climate; OJ L 442, 9.12.2021); Delegated Regulation (EU) 2023/2486 (the other four objectives; OJ L, 21.11.2023); Delegated Regulation (EU) 2021/2178 (disclosures under Article 8) — opened 2026-10-19. ✔ The simplifying act amending them is Commission Delegated Regulation (EU) 2026/73 of 4 July 2025 (OJ L, 8.1.2026); it applies from 1 January 2026, and for financial year 2025 undertakings may apply the previous versions (Article 4) — http://data.europa.eu/eli/reg_del/2026/73/oj, opened 21.10.2026.

🧔 Adult What the act is. Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector — OJ L 317, 9.12.2019, p. 1 ✔. It says what must be explained. It does not ban products and does not rank them as "good" or "bad".

Article 6 — integration of sustainability risks. Financial market participants include in their pre-contractual disclosures a description of (a) the manner in which sustainability risks are integrated into their investment decisions, and (b) the results of the assessment of the likely impacts of those risks on the returns of the products they make available. Where they deem sustainability risks not to be relevant, the description includes a clear and concise explanation of the reasons therefor (Article 6(1)) ✔.

Article 8 — products that promote environmental or social characteristics. Where a product promotes, among other characteristics, environmental or social characteristics, or a combination of them, provided that the investee companies follow good governance practices, the disclosure includes (a) information on how those characteristics are met and (b) if an index has been designated as a reference benchmark, whether and how that index is consistent with those characteristics (Article 8(1)) ✔.

Article 9 — products with a sustainable investment objective. Where a product has sustainable investment as its objective and an index has been designated as a reference benchmark, the disclosure is accompanied by information on how the index is aligned with that objective and why and how it differs from a broad market index (Article 9(1)). Where no index has been designated, it includes an explanation of how that objective is to be attained (Article 9(2)). Where a product has a reduction in carbon emissions as its objective — the objective of low carbon emission exposure in view of achieving the long-term global warming objectives of the Paris Agreement (Article 9(3)) ✔.

Article 13 — marketing communications. Financial market participants and financial advisers ensure that their marketing communications do not contradict the information disclosed under the regulation (Article 13(1)) ✔.

How to read it (steps).

1. In the pre-contractual document (for funds — the template in Annex II or III to Delegated Regulation (EU) 2022/1288 ✔, per ESMA), find the sustainability section.
2. Ask: what is promised — a characteristic (Article 8) or an objective (Article 9)? Or only the integration of risks (Article 6)?
3. Find the binding elements of the strategy — what the product is obliged to do, not what it "aims for".
4. Find the share of investments that meets those elements.
5. Compare with the advertising. Under Article 13 it must not contradict the document.

Important. The article number is not a "grade". Article 8 does not mean "better" than Article 6, and Article 9 is not "the best". It is a category of disclosure. The law does not define it as a quality label.

SFDR revision (proposal). On 20 November 2025 the Commission proposed amendments to SFDR aiming at "simpler and more usable" disclosures for investors — COM(2025)0841, procedure 2025/0361(COD) ✔ (https://finance.ec.europa.eu/sustainable-finance/disclosures/sustainability-related-disclosure-financial-services-sector_en, accessed 2026-10-19). The Council adopted its negotiating position on 24 June 2026; it provides for three categories — "sustainable", "transition" and "ESG basics" — instead of the current concepts ✔ (https://www.consilium.europa.eu/en/press/press-releases/2026/06/24/council-agrees-position-on-simpler-transparency-rules-for-sustainable-financial-products/). In the European Parliament, the ECON committee voted its report on 10.09.2026 and the plenary confirmed the decision to enter negotiations on 07.10.2026 ✔ (EP Legislative Observatory, 2025/0361(COD)). As of 19.10.2026 no new act has been adopted: this is a proposal under negotiation between the institutions. Under the Commission's proposal, at least 70% of a product's investments in each category must meet the stated objective (recital 14), and the amendments would apply 18 months after their entry into force (Article 4) ✔ (text of COM(2025) 841, opened 21.10.2026). The Council's position adds, for example, at least three mandatory indicators of adverse impacts in the "sustainable" and "transition" categories ✔ (Council press release of 24.06.2026). The final thresholds and dates will be known only once the act is adopted and may differ from the proposal. Until a new act is adopted, the texts above apply.

Myth → truth

• Myth: "Article 9 means the product does no harm."
• Truth: Article 9 means the product has a sustainable investment objective and must explain how it pursues it. Whether it achieves it is checked in the periodic reports.

Who profits? Whoever reads the disclosure, not just the name.

Scene for 3D: three windows in one wall — "risk", "characteristic", "objective". The child looks through each and sees how deep the room is.

→ Continue at the source

• EUR-Lex, SFDR: http://data.europa.eu/eli/reg/2019/2088/oj ✔
• European Commission — SFDR and its revision: https://finance.ec.europa.eu/sustainable-finance/disclosures/sustainability-related-disclosure-financial-services-sector_en ✔

Sources

• ✔ Regulation (EU) 2019/2088, Articles 6, 8, 9, 13 (accessed 2026-10-19).
• ✔ ESMA, ESMA34-1592494965-657, paragraphs 16–18 — binding elements, Annexes II and III to Delegated Regulation (EU) 2022/1288.
• ✔ European Commission — proposal to revise SFDR of 20.11.2025 (the fact of the proposal only).
• ✔ Council of the EU, press release of 24.06.2026 (position on SFDR); EP Legislative Observatory, 2025/0361(COD) — ECON 10.09.2026, plenary 07.10.2026.
• ✔ Proposal COM(2025) 841 — recital 14 (70%) and Article 4 (application 18 months after entry into force): http://publications.europa.eu/resource/celex/52025PC0841, opened 21.10.2026.

🧔 Adult What the document is. ESMA Guidelines on funds' names using ESG or sustainability-related terms, ESMA34-1592494965-657, 21.08.2024 ✔.

Legal nature. The guidelines are issued under Article 16 of the ESMA Regulation. Competent authorities and financial market participants "must make every effort" to comply with them (paragraph 9). They are not law, but national supervisors incorporate them into their practice (paragraph 10) ✔.

Scope (paragraphs 1–3). They apply to UCITS management companies, managers of alternative investment funds (including EuVECA, EuSEF, ELTIF) and managers of money market funds. They concern the duty to act honestly and fairly and the requirement that information in marketing communications be fair, clear and not misleading ✔.

Dates (paragraphs 4–6). The guidelines apply three months after their publication in all official languages. ESMA states that this is 21 November 2024. For new funds — immediately from that date. For existing funds — after six months, i.e. 21 May 2025 ✔ (https://www.esma.europa.eu/press-news/esma-news/esma-publishes-translations-its-guidelines-funds-names, accessed 2026-10-19).

Content (paragraphs 16–18, 21).

• Funds using transition-, social- or governance-related terms: at least 80% of investments used to meet the environmental or social characteristics, or the sustainable investment objectives, in accordance with the binding elements of the investment strategy; and exclusion of companies under Article 12(1)(a)–(c) of Delegated Regulation (EU) 2020/1818 ✔.
• Funds using environmental or impact-related terms: the same 80% threshold and exclusion of companies under Article 12(1)(a)–(g) of the same regulation ✔.
• Funds using sustainability-related terms: 80%, exclusions (a)–(g) and a commitment to invest meaningfully in sustainable investments as defined in Article 2(17) SFDR ✔.
• Transition or impact terms: investments are on a clear and measurable path to social or environmental transition, or are made with the objective of generating a positive and measurable impact alongside a financial return (paragraph 21) ✔.

Which words? The guidelines give examples: "green", "environmental", "climate" (and the abbreviations "ESG", "SRI") for environment; "social", "equality" for social; "governance" for governance; and derivatives of "transition", "impact", "sustainable" ✔ (paragraph 15).

How it is monitored (paragraph 22). Supervisors assess compliance throughout the life of the fund; investors can check the information in periodic disclosures. A temporary deviation from the threshold that is not a deliberate choice of the manager is treated as a passive breach and corrected in the interest of investors ✔.

What they do not say. The guidelines do not say that the 20% outside the threshold is "harmful". They do not rate the fund. They do not answer the question "is this a good investment?" They only set a yardstick for when the name is acceptable.

How to use them. If the name contains such a word: (1) find in the documents the share that meets the binding elements; (2) see what is excluded; (3) see whether another index is used as a reference; (4) compare with chapter 4. If something is unclear — ask, and ask for the answer in writing (competence 511).

Example: Bulgaria — the national supervisor for funds is the Financial Supervision Commission (FSC), whose site has a "Complaints" section ✔: https://www.fsc.bg. In ESMA's compliance table (ESMA34-1592494965-690, 16.07.2025) the FSC is listed as "Intends to comply" by 1 April 2026, noting that legislative changes are needed in Bulgaria ✔; whether this has been done is unconfirmed ⚠ (see Sources).

Check in your country — find your national financial supervisor (the authority that licenses investment funds and handles complaints about them) and look on its site for how it applies the ESMA guidelines on fund names and where to send a complaint.

Myth → truth

• Myth: "If the name says 'green', everything in the fund is green."
• Truth: at least 80% must serve the stated objective; the rest may be something else. The threshold is a yardstick for the name, not for the whole.

Who profits? The investor who looks at the binding elements, not at the advertising.

Scene for 3D: a box with a label on the lid. The child opens it and sees that 8 of 10 compartments are filled as the label says, and 2 are empty.

→ Continue at the source

• ESMA — the guidelines (English): https://www.esma.europa.eu/sites/default/files/2024-08/ESMA34-1592494965-657_Guidelines_on_funds_names_using_ESG_or_sustainability_related_terms.pdf ✔
• Example: Bulgaria — FSC, the national supervisor ✔ (the site has a "Complaints" section): https://www.fsc.bg

Sources

• ✔ ESMA, Guidelines on funds' names using ESG or sustainability-related terms, ESMA34-1592494965-657, 21.08.2024, paragraphs 1–6, 9–10, 15–18, 21–22 (accessed 2026-10-19).
• ✔ ESMA, "ESMA publishes translations of its Guidelines on funds' names", 21.08.2024 — the dates 21.11.2024 and 21.05.2025 (accessed 2026-10-19).
• ✔ ESMA compliance table (ESMA34-1592494965-690, 16.07.2025): Bulgaria's FSC "Intends to comply" by 1 April 2026; the table notes that legislative changes are needed in Bulgaria (transposition of Directive (EU) 2024/927). ⚠ Whether this was done by October 2026 is not confirmed (a search on 21.10.2026 found neither a newer ESMA table nor an opened, promulgated text of the Bulgarian law).

🧔 Adult What the act is. Directive (EU) 2024/825 of 28 February 2024 amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information — OJ L, 6.3.2024, ELI: http://data.europa.eu/eli/dir/2024/825/oj ✔.

When it applies (Article 4(1)). By 27 March 2026 Member States adopt and publish the necessary measures; they apply them from 27 September 2026 ✔. The directive is addressed to the Member States. For traders and consumers, what applies is the national law that transposes it.

Example: Bulgaria — the directive was transposed through the Consumer Protection Act, amended in State Gazette No. 87 of 24.09.2026; the new provisions have been in force since 27.09.2026 ✔ (Consumer Protection Act, § 13a, item 15 of the Supplementary Provisions, lex.bg, opened 21.10.2026). The Bulgarian law uses its own terms for "environmental claim", "generic environmental claim" and "sustainability label" (§ 1, items 60–62 of the Supplementary Provisions) ✔.

Check in your country — look for your national consumer protection law (the act that transposes Directive 2005/29/EC on unfair commercial practices) and check that it has been amended to transpose Directive (EU) 2024/825, and from what date. EUR-Lex lists the national transposition measures for each directive.

The main definitions (new Article 2 of Directive 2005/29/EC). All ✔:

• "environmental claim" — any message or representation which is not mandatory under Union or national law, in any form (text, pictorial, graphic or symbolic — including labels, brand names, company names or product names), in the context of a commercial communication, which states or implies that a product, product category, brand or trader has a positive or zero impact on the environment, or is less damaging to the environment than other products, or has improved its impact over time;
• "generic environmental claim" — any environmental claim made in written or oral form not contained in a sustainability label, where the specification of the claim is not provided in clear and prominent terms on the same medium;
• "sustainability label" — any voluntary trust mark, quality mark or equivalent, either public or private, that aims to set apart and promote a product, process or business by reference to its environmental or social characteristics;
• "certification scheme" — a third-party verification scheme whose terms are publicly available and which meets criteria: it is open under transparent, fair and non-discriminatory terms; its requirements are developed in consultation with experts and stakeholders; it has procedures for non-compliance, including withdrawal or suspension of the label; monitoring is objective and carried out by a third party independent of both the scheme owner and the trader.

Banned practices (Annex I to Directive 2005/29/EC — the "blacklist", new points). The ban applies in all circumstances, without assessing the effect on the consumer's decision ✔:

• point 2a: displaying a sustainability label that is not based on a certification scheme or not established by public authorities;
• point 4a: making a generic environmental claim for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim;
• point 4b: making an environmental claim about the entire product or the trader's entire business when it concerns only a certain aspect of the product or a specific activity;
• point 4c: claiming, based on offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of emissions;
• point 10a: presenting requirements imposed by law on all products within the relevant category on the Union market as a distinctive feature of the trader's offer.

New misleading actions (Article 6(2) of Directive 2005/29/EC). It is also misleading to make an environmental claim related to future performance ("net zero by 2040") without clear, objective, publicly available and verifiable commitments set out in a detailed and realistic implementation plan with measurable, time-bound targets, including allocation of resources, and regularly verified by an independent third-party expert whose findings are made available to consumers ✔. It is also misleading to advertise benefits for consumers that are irrelevant and do not result from any feature of the product or business ✔.

"Recognised excellent environmental performance" means performance under Regulation (EC) No 66/2010 on the EU Ecolabel, under national or regional EN ISO 14024 type I ecolabelling schemes officially recognised in the Member States, or top environmental performance under other applicable Union law ✔.

Scope. This is the general framework for business-to-consumer commercial practices. For financial products the special rules also apply (SFDR, ESMA, chapters 4–5). Directive 2005/29/EC also applies to financial services for consumers, and Article 3(9) allows Member States to impose stricter rules for them ✔; the general directive applies only to the extent that there are no specific Union rules ✔ (Article 3(4)). If in doubt about which authority is competent for a particular financial product, ask your national consumer protection authority or your financial supervisor.

The Green Claims Directive (a separate act, a proposal). It is different from Directive 2024/825. It was proposed by the Commission on 22 March 2023 (COM(2023)0166) ✔ and would introduce prior verification of environmental claims. It has not been adopted and there is no published act; its future depends on negotiations between the institutions. In the EP Legislative Observatory (procedure 2023/0085(COD)) ✔, as of 21.10.2026 the procedure is "awaiting Council's 1st reading position"; Parliament adopted its position on 12.03.2024, and the last recorded event is dated 16.12.2024.

Myth → truth

• Myth: "Since it's banned, every 'green' word is a lie."
• Truth: the word is not banned. What is banned is an unsubstantiated generic claim. A specific, substantiated and verifiable claim is allowed.
• Myth: "The 'Green Claims' Directive is already in force."
• Truth: what is in force (since 27.09.2026) is Directive 2024/825. The Green Claims Directive is a different text that has not been adopted.

Who profits? The consumer — who gets a basis to ask for proof. And the honest trader — who no longer competes with unsubstantiated claims.

Scene for 3D: two signs on a shelf: "good for nature" and "made with 30% less water by method X, verified by Y". The child chooses which one can be checked.

→ Continue at the source

• EUR-Lex, Directive (EU) 2024/825: http://data.europa.eu/eli/dir/2024/825/oj ✔
• Example: Bulgaria — Consumer Protection Commission (CPC), consumer protection and reporting: https://kzp.bg ✔

Sources

• ✔ Directive (EU) 2024/825, Articles 1, 4 and the Annex (accessed 2026-10-19).
• ✔ Bulgaria: Consumer Protection Act, current text (amended State Gazette No. 87 of 24.09.2026) — § 1, items 60–62 and § 13a, item 15 of the Supplementary Provisions: https://www.lex.bg/bg/laws/ldoc/2135513678 (opened 21.10.2026).
• ✔ EP Legislative Observatory, procedure 2023/0085(COD) — https://oeil.europarl.europa.eu/oeil/en/procedure-file?reference=2023/0085(COD) (opened 21.10.2026).

🧔 Adult What the act is. Regulation (EU) 2023/2631 of 22 November 2023 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds — OJ L, 30.11.2023, ELI: http://data.europa.eu/eli/reg/2023/2631/oj ✔. It applies from 21 December 2024 (Article 72(2)) ✔.

Subject matter (Article 1). (a) Uniform requirements for issuers that wish to use the designation "European Green Bond" or "EuGB" for bonds made available to investors in the Union; (b) a system for registering and supervising external reviewers; (c) optional disclosure templates for bonds marketed as environmentally sustainable and for sustainability-linked bonds ✔.

The designation (Article 3). "European Green Bond" or "EuGB" is used only for bonds that meet the requirements of the relevant title of the regulation ✔.

Use of proceeds (Article 4(1)). Before maturity, the proceeds are allocated in full, in line with the Taxonomy requirements, to one or more of the categories: (a) fixed assets that are not financial assets; (b) capital expenditure under the relevant point of Delegated Regulation (EU) 2021/2178; (c) operating expenditure incurred no more than three years before issuance; (d) financial assets created no later than five years after issuance; (e) assets and expenditure of households ✔.

Flexibility (Article 5). Up to 15% of the proceeds may be allocated to activities that meet the Taxonomy requirements except for the technical screening criteria, where no such criteria have yet entered into force for them, or in the context of international support reported under internationally agreed rules ✔.

Factsheet and external review (Articles 10, 15). Before issuance the issuer completes a factsheet (Annex I) and obtains a pre-issuance review with a positive opinion from an external reviewer; it publishes them on its website, free of charge, until at least 12 months after maturity ✔.

Reporting (Article 11). Allocation reports are drawn up for every 12-month period until the proceeds are fully allocated ✔ (using the template in Annex II).

How to read it. Five things: (1) is there a factsheet; (2) is there an external review; (3) what the proceeds are invested in; (4) how large the "flexibility" share is; (5) what the usual risks of the bond are — the issuer's credit risk, interest-rate risk, liquidity — they do not change with the colour of the name (see Module 24, Investing: the basics).

What it does not say. The name "European green bond" is no guarantee that you get your money back and no measure of return. It is not a recommendation. Bonds marketed as "green" without this designation are a different case — for them the regulation provides only optional disclosure templates.

Myth → truth

• Myth: "A green bond is safer than an ordinary one."
• Truth: safety depends on the issuer and the terms. Green is about what the money is spent on, not about how reliable the promise to repay is.

Who profits? The investor who can trace the money — when the documents are complete.

Scene for 3D: a river of coins flowing towards pipes labelled "wind", "insulation", "water". The child follows each coin to its final pipe.

→ Continue at the source

• EUR-Lex, Regulation (EU) 2023/2631: http://data.europa.eu/eli/reg/2023/2631/oj ✔
• ESMA — register of external reviewers ✔: https://www.esma.europa.eu/esmas-activities/investors-and-issuers/external-reviewers-european-green-bonds

Sources

• ✔ Regulation (EU) 2023/2631, Articles 1, 3, 4, 5, 10, 11, 15; applicable from 21.12.2024 (accessed 2026-10-19).
• ✔ Article 72(2) — application from 21.12.2024; Article 72(4) — Article 40, Article 42(1)–(8) and Article 43 (registration and supervision of external reviewers) from 21.06.2026; transitional provisions — Articles 69–70 (opened 2026-10-19). ESMA's register has been published; the transitional regime ended on 21–22.06.2026.

🧔 Adult Detailed table.

Links with the law.

• Questions 1–2 — Directive 2024/825: a generic claim without specification (point 4a), a claim about the whole when it concerns a part (point 4b) ✔.
• Question 3 — "clear, objective, publicly available and verifiable" commitments (Article 6(2)(d)) ✔.
• Question 4 — a "certification scheme" with an independent third party; a label without one is on the blacklist (point 2a) ✔.
• Question 5 — for financial products: costs and charges in the key information documents (Module 24, Investing: the basics); for ESG funds — the binding elements (chapters 4–5).

When to report. If you think a claim is misleading — report it to your national consumer protection authority; for financial products — to your national financial supervisor. The authority decides whether there is an infringement. You collect: a screenshot/archive of the claim, the date, the place, the product.

Example: Bulgaria — misleading claims are reported to the Consumer Protection Commission (CPC, https://kzp.bg) ✔ ("Submitting reports and complaints" section); for financial products — to the Financial Supervision Commission (FSC, https://www.fsc.bg) ✔ ("Complaints" section).

Check in your country — find the consumer protection authority and the financial supervisor, and on each site the page for complaints or reports: what they accept, in what form, and what deadlines apply.

For businesses and organisations. 🏗 Business/Organisation If you are the one making a claim, ask yourself the same five questions before publishing it:

1. Is it specific, and is the explanation on the same medium?
2. Is the scope right — for the product, for a part, for the business?
3. Do I have data and a method I can show?
4. Is there independent verification or a recognised scheme?
5. Am I promising a future target without a plan and independent verification (Article 6(2)(d))?

Myth → truth

• Myth: "If I can't check it, it's a lie."
• Truth: if you can't check it — it isn't proven. That is not the same as a lie. That is why we ask rather than accuse.

Who profits? Whoever asks the question calmly, and whoever can answer it calmly.

Scene for 3D: five doors. The child knocks on each with a question and sees which ones open, and onto what.

→ Continue at the source

• Directive (EU) 2024/825: http://data.europa.eu/eli/dir/2024/825/oj ✔
• Example: Bulgaria — CPC: https://kzp.bg ✔

Sources

• ✔ Directive (EU) 2024/825, Annex, points 2a, 4a, 4b; Article 6(2)(d) and (e) of Directive 2005/29/EC as amended (accessed 2026-10-19).
• ✔ Bulgaria: the reports and complaints pages of the CPC and the FSC were opened on 2026-10-19; the specific procedure and deadlines are read there.

🧔 Adult What the framework says. An adult understands that sustainability-related factors and government climate policies may affect the risk and return of investments (401), and that environmental, social or governance risks may harm a company's financial performance (402) ✔.

What the law says. For sustainability risks, how they are integrated and their likely impact on returns must be disclosed (SFDR, Article 6(1)) ✔ (chapter 4). The law requires an explanation; it does not draw a conclusion.

Three different questions that often get mixed up.

1. Does the world affect the investment? (e.g. new rules, drought, a change in demand) — sustainability risk.
2. Does the investment affect the world? — sustainability factors, impact.
3. How much will it return? — return. Neither of the first two answers the third.

What cannot be said:

• that "sustainable" investments always carry less risk;
• that they bring higher returns;
• that they bring lower returns.

Results depend on the period, the market, the costs, the diversification and the choice of specific holdings. This module offers no opinion on which way is right — this is the place for a clear separation between what is promised and what is proven. The basics — risk, return, diversification, costs — are in Module 24 (Investing: the basics).

Link with fraud (Module 17, Fraud, pyramid schemes and "get rich quick"). When "green" is used as an argument for a guaranteed or unusually high return, the rules of Module 17 apply: a promise of profit without risk is a signal to be extra careful. The check is the same — who is licensed (by your national financial supervisor), is there a register, is there a key information document, what are the costs.

Personal preferences. The law recognises that people may have sustainability preferences. An adviser must ask about them before giving advice (competence 468; EU/OECD-INFE); you can formulate and explain them (497–499). The preferences are yours. They are neither good nor bad — but they sit alongside your goal, time horizon and risk tolerance, not instead of them.

Two approaches (per the framework, without judgement). The EU/OECD-INFE framework describes that investors can follow their own preferences in different ways — for example by excluding certain sectors or companies (divestment) or by engaging with companies to change their activities (engagement) (competence 221) ✔. The module recommends neither.

Myth → truth

• Myth: "Sustainable is a sure profit."
• Truth: there is no investment with a sure profit. Sustainability is a characteristic described in a document; the result is observed over time.
• Myth: "Sustainable investments are weaker by nature."
• Truth: that is not true as a general statement either. Ask about the specific product, the period and the costs.

Who profits? Whoever keeps two things apart: what was promised as an objective and what actually happened as a result.

Scene for 3D: two scales — one holds "preferences", the other "risk and time horizon". The child understands that they are balanced together but are not the same thing.

→ Continue at the source

• Financial competence framework for adults (EU/OECD-INFE), 2022 — European Commission: https://finance.ec.europa.eu/publications/commission-and-oecd-infe-publish-joint-framework-adults-improve-individuals-financial-skills_en ✔

Sources

• ✔ EU/OECD-INFE financial competence framework for adults, 2022, competences 221, 401, 402, 468, 497–499 (accessed 2026-10-19; local copy).
• ✔ Regulation (EU) 2019/2088, Article 6(1) (accessed 2026-10-19).