Some analysts have pointed out that this could reflect certain doubts in the market regarding the credibility of these bonds for various reasons, including: i) the lack of ambition in setting goals, ii) the low penalties, iii) uncertainty regarding the possibility of not reaching goals and iv) the fact that prospectuses include language permitting the cancellation of coupon step-up in the event of changes in rules, regulations, guidelines or in the company’s operations. So the risk of greenwashing in this type of instruments could re-emerge. In order to avoid this, the verification and external review of their conditions and the possible inclusion of this type of bonds in the European green bond standard could help to provide reassurance. As we have seen, the existence of definitions is very important, as is transparency to avoid greenwashing. According to the European Supervisory Agencies’ (ESAs) common high-level understanding of greenwashing published last week, they understand greenwashing “as a practice where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants.”5 Also it is recognised that greenwashing appears to result from multiple interrelated drivers and, moreover, that it depends on the area we are considering, whether asset management, the investment industry, corporates or benchmarks, but we can conclude that a common element in greenwashing is the lack of transparency.

- Green bond issuance saw the largest increase, comparing with the previous quarter and with the same quarter a year earlier. Financials and governments remained the largest issuers with a share of over 73 percent in 2023 Q1. Indeed, new sovereign issuance increased sharply in 2023 Q1, the European Commission issuing € billion of NextGenerationEU green bonds in its fourth syndicated transaction for 2023. 1  See IMF (2023). Climate Finance Monitor Q1 2023. May. 1  - Conversely, the issuance of most other types of bonds declined. For example, sustainability-linked instruments saw slower growth in the first quarter of the year, which, according to the IMF, “may reflect market participants’ perceptions around greenwashing and the credibility of the asset class to drive companies to meet sustainability targets”. Focusing on the euro area, according to the experimental indicators on sustainable finance developed by the Eurosystem: - The outstanding amount of sustainable debt securities issued in the euro area has more than doubled in the last two years. Securities designed to finance green and social projects, which account for the majority of the market, have seen a particularly strong increase. - Over the same period, sustainability-linked bonds recorded the highest growth rate. However, the relevance of these instruments in the overall debt securities market remains minor. Another interesting aspect highlighted by these experimental indicators is holdings. Since the beginning of 2021, euro area holdings of sustainable debt securities have grown continuously, following a similar trend to the one observed for euro area issuances.