By Jonas Ekblom
BRUSSELS (Reuters) - European Union lawmakers agreed to support tweaked proposals governing which financial products can be called green and sustainable after EU member states rejected a deal last week.
The rules have the potential to make the European Union a leader in the booming $200 billion green bond market and the new compromise won the approval of analysts and environmental groups.
"It will encourage the markets to make sustainable investments the mainstream," Bas Eickhout, the Green lawmaker leading the negotiations for the European Parliament, said in a statement on Monday.
But one European Parliament official described the changes to the text as "purely cosmetic".
Last week's rejection halted a deal struck a week earlier by EU lawmakers and the Finnish presidency of the EU, which negotiators hailed as a landmark compromise that could establish a global standard on green bonds and other financial products aimed at climate-conscious investors.
Britain, France, the Czech Republic, Hungary, Poland, Slovakia, Romania, Bulgaria and Slovenia had opposed the deal, fearing it would prevent investments in nuclear and clean coal projects from being labeled as green.
The new text leaves the door open for labeling nuclear energy as sustainable. But lawmakers say that will never happen as there will be a "no-harm" test to all investment labels.
They did not go into detail what this test would entail.
This proposed law is a first step toward establishing a framework labeling system for sustainable investment. A full set of labels will be developed by an expert group in 2021.
The compromise reached on Monday was cheered by analysts.
"We have a deal which will be instrumental in the transition to a net-zero emissions economy," said Tom Jess, policy advisor at climate change think tank E3G, in a statement on Tuesday.
The bill is expected to be approved by representatives from all EU member states on Wednesday and then sent to the EU's executive, the European Commission, which will sign it into law.