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The European flag flies outside the European Commission headquarters in Brussels, Belgium, September 20, 2023.Reuters/Yves Herman/File photo, licensed.
LONDON, Oct 5 (Reuters) – European Union (EU) lawmakers on Thursday called for a “green” label to help investors choose sustainable companies and avoid greenwashing and misleading climate-friendly claims. Approved new standards for companies issuing bonds.
The European Parliament has voted in favor of new voluntary standards for the use of the ‘European Green Bond’ label, billing it as the first of its kind in the world.
Europe is the world’s largest issuer of green bonds, accounting for more than half of global issuance in 2021, but only 3-3.5% of the total bond market.
“Companies issuing bonds now have even more confidence that their bonds are suitable for investors who want to add green bonds to their portfolios,” Parliament’s Economic Affairs Committee said in a statement.
“This will increase interest in these types of financial products and support the EU’s transition to climate neutrality.”
Companies wishing to certify their corporate bonds as ‘green’ within the EU will be required to disclose information about how the proceeds of the bonds will be used.
At least 85% of the funds raised must be allocated to activities in line with the EU’s ‘taxonomy’ for sustainable activities.
Companies will also need to demonstrate how these investments feed into their plans for the transition to a net-zero carbon economy.
This standard sets out a registration system and supervisory framework for external review bodies for European green bonds.
EU member states, who have a joint say on the standards, agreed to this earlier this year.
Report by Huw Jones.Editing: Kirsten Donovan
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