The European Parliament adopted a new voluntary standard for the use of a “European Green Bond” label (or “EuGB”), the first of its kind in the world.

The standards will enable investors to direct their money more confidently towards more sustainable technologies and businesses, as issuers will be required to disclose considerable information about how the bond’s proceeds will be used. Issuers will be more certain that their bond will be suitable to investors who want to add green bonds to their portfolio, therefore increasing the interest for this kind of financial product and support the EU’s transition to climate neutrality. The regulation also establishes a registration system and supervisory framework for external reviewers of European green bonds.

These standards are aligned with the EU’s taxonomy framework that defines which economic activities the EU considers environmentally sustainable.