European Union lawmakers agreed a new standard for companies issuing green bonds in an effort to help fixed-income investors avoid greenwashing.

The European Parliament and the Swedish presidency, in its role as representative for EU leaders, agreed requirements for companies that issue green and sustainable bonds as part of their transition to a low-carbon economy.

The European Green Bonds Standard will help investors and managers to ensure they are investing in sustainable technologies and businesses, the European Parliament said in a news release Tuesday.

Companies that issue bonds according to the new standard will be required to disclose information about how bond proceeds are used and how these investments aid their overall transition plans. The information will be independently verified by third-party reviewers.

The adoption of the standard will guarantee, according to the parliament, that investors’ bond investments aligned with the EU taxonomy — a classification of green activities used in the EU’s regulatory reporting — which is yet to be finalized.

Until the taxonomy is completed, the EU also agreed to allow 15% of the proceeds from a green bond to be invested in economic activities that are yet to be clarified.

“With €100 trillion ($106.76 trillion) in annual trades, the European bond market is the single most popular option for businesses and governments to raise finances. Tonight the EU has taken a big step to green this massive market by adopting the first regulation in the world on green bonds. But we have also gone further by tying green bonds to the overall green transition of the company as a whole,” Paul Tang, the parliament’s committee rapporteur, said in the release.

The EU also Tuesday agreed standards for companies issuing sustainable bonds that plan to issue green bonds in the future but aren’t able to meet the new standard immediately.

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