BRUSSELS (Reuters) - The $200 billion (Â£155.88 billion) green bond market is set for a shake up after the European Union on Thursday reached a deal on a new set of rules governing which financial products can be called "green" and "sustainable".
Under the agreement, all financial products that claim to be green or sustainable will have to disclose exactly what proportion of their investments are environmentally friendly.
"With credible and ambitious definitions for sustainable investment the EU will lead the world in sustainable finance," said Green EU lawmaker Bas Eickhout, lead negotiator on the matter, in a statement Thursday.
"Now that we have credible definitions on which economic activities can be considered sustainable, the new Commission will have to start preparing to clearly identify environmentally harmful activities and the investments that currently support them."
Negotiations have been taking place for the better part of the autumn, with the biggest sticking point around whether investments into natural gas or nuclear energy could be considered green.
An EU parliament official said such investments would not be excluded from the taxonomy, but labelling them as green would be very difficult under the new rules. EU member states had wanted looser definitions.
The negotiations were held between lawmakers from the European Parliament and the European Council, consisting of representatives of the 28 EU member states. The deal still needs to be approved by the European Commission.