please summarise about the given informations (discussion and policy implication of green bonds)

emissions may have difficulties to attract funding which is needed for the transition. However, if the green rating takes into account information on firms' commitment to the transition and assesses the credibility of forward-looking targets and transition plans, it may be a very efficient instrument. Carbone et al. (2021) show that markets do appreciate firms' disclosures of current emissions as well as setting forward-looking targets to cut emissions as such firms exhibit lower carbon risk. Furthermore, the effect of climate commitments on market credit risk tends to be stronger for more ambitious targets.increased engagement by policymakers and central banks in the discussion of the green transition, particularly in Europe, and the need for scaling up green finance and a larger publicity of ESG investing. This wider discussion may attract a large range of investors and may shift the investor base from primarily responsible investors to a wider public. Responsible investors may have the mandate and capacity to engage with issuers of green assets and to ascertain environmental benefits of green assets, i.e. green bonds. Mass investors, institutional or retail, may neither have the mandate nor the knowledge to do so. Thus, a regulatory standard, like the European Union Green Bond Standard (EUGBS) is crucial in bridging this knowledge gap as it would provide a clear definition of green bonds and establish requirements to assure that proceeds raised from green bonds contribute to the transition to a more sustainable and low-carbon economy. Green coefficient 95% Confidence Interval - Excess return of the MSCI Europe index over composite index 0.25 20 15 0.2 10 0.15 - 5 0.1 -10 -15 -20 -20 0.05 -25 -25 30 -30 0 Nov18 Feb 19 May 19 Aug19 Nov19 Feb20 May 20 Aug20 NOVZO Feb2 May 21 01/01/20 01/01/2017 01/01/2018 01/01/2019 01/01/2020 01/01/2021 Figure 9: Evolution of the greenium and excess return of composite index over ESG Figure 10: Index of Climate concern from equities Bua et al. (2021) So far, there is mixed evidence if the issuance of green bonds is associated with a reduction in issuers' carbon emissions. Flammer (2021), Fatica and Panzica (2021) show that only certified green bonds are associated with emission reductions at issuer level, while Ehler et al. (2020) find no relationship. One reason why green bonds may fail to deliver an emissions reduction and other environmental benefits is because green bonds, by definition, raise funding for specific projects and neglect issuers' overall commitment and strategy regarding climate change. This may also explain the highly economic and statistical significance of the greenium for green bonds issued by firms in alternative energy sectors. These firms can be easily identified as green by investors. Ehler et al. (2020) also raise this point and suggest a rating system to rank firms according to their levels of emissions. An issue with this solution is that firms with currently high levels of ECB Working Paper Series No 2728 / September 2022 295 Discussion and policy implications Our findings show changing dynamics in the greenium which are driven by investors' demand. This observation is similar to trends observed in other markets. First, Fig. 9 shows a very similar pattern in the spread between the returns of the MSCI Europe index and the MSCI Europe ESG leaders index. Pastor et al. (2021) find a similar trend in US equity markets with significant over-performance of green equity assets. van der Beck (2021) confirms this finding and shows that over-performance in US ESG equities is driven by inflows into ESG funds. We also observe a significant increase in holdings of ESG funds by euro area investors, particularly by retail investors and other investment funds. The question is: what drives this increased interest in ESG/green assets? Pastor et al. (2021) argue that the excess return of green assets is driven by climate concerns. We investigate this explanation using the index of climate concern constructed by Bua et al. (2021) following the approach of Engle et al. (2020). However, we see that the index (Fig. 10) is rather volatile and exhibits no increasing trend. To obtain a trend Pastor et al. (2021) use a trick by computing a moving cumulative index of climate concern over the preceding three years with a decaying memory. Alternative explanations to the growing interest in green assets might be found in the ECB Working Paper Series No 2728 / September 2022 28