be more invested in high and mid co2 intensive sectors, at about 14 % and 10 % of their securities portfolio respectively. ( fsr interim 2021 ) overall, this paints a fairly favourable picture for the maltese financial system : the potential impact from climate risks is judged as relatively contained, although data limitations and early - stage nature of such exercise caution against an exceedingly benign interpretation. addressing climate change will require substantial investment, both in shifting away from dependence on fossil fuels and in adapting to higher temperatures, droughts and more extreme weather events. this investment will need to be financed. a growing segment of financial markets relates to “ green ” instruments, which allocate resources to finance environmentally - friendly investment. whichever the starting point, the transition to “ green finance ” is to be supported. the green bond market, for example, has been growing strongly in recent years, reaching a volume of cumulative issuance of about 1. 5 trillion usd in 2021. while it remains a niche relative to the overall bond market, there is evidence of investors ’ interest for instruments aimed at financing environmental projects. according to the ecb trading in secondary markets bears evidence of a “ greenium ”, that is a premium that investors are willing to pay to hold green bonds compared to securities with identical characteristics. this is a clue that if properly supported by policymakers, for example with the adoption of a common regulatory standard, the demand for green bonds could pick up rapidly, fostering the transition towards net zero. in this respect, malta is catching up compared to larger european countries. although there are currently no green instruments listed at the malta stock exchange ( mse ), despite mse having laid out advantageous incentives for the listing of green bonds in 2021, green finance is picking up. over the summer, thirteen businesses set up the malta esg alliance with the goal of taking the lead in the de - carbonisation efforts at a national level. gradually esg disclosure is becoming the norm. nevertheless, a report recently published by the central bank of malta has shown that investors in local markets are still relatively new to green investments, with over 60 % of respondents to an ad hoc survey declaring that they have never invested in green bonds. respondents also emphasised the lack of a unified standard and low market liquidity as constraints to the adoption of green financial instruments. green finance in domestic capital markets thus has great upside potential. interest in green finance is widespread among investors and if policies promoting educational awareness in this regard were made available

at a larger scale, supply could meet demand, triggering a positive cycle that would jumpstart green finance in malta. a bank research paper suggested that a catalyst for change in this direction could be the issuance of green bonds by the government. both the bank and the government would be studying this possibility. the third core objective of eurosystem relates to sharing expertise and fostering wider action towards the adoption of clean source of energy. such efforts will take several forms. the eurosystem is working to enhance transparency by bridging data gaps working in tandem with european and international partners. transparency shall apply to the eurosystem ’ s own actions as well. the ecb and the central banks of the euro area will be disclosing climate - related information about corporate purchases, non - monetary policy portfolios and environmental footprint. lastly, the eurosystem is also striving to reduce the environmental footprint of its day - to - day corporate activities. the central bank of malta is doing its part. in line with the eurosystem ’ s common stance for climate change - related sustainable and responsible investments ( sris ), the bank is incorporating such principles in the management of its non - monetary portfolio of assets. the bank manages part of its assets externally through mandates, etfs and mutual funds. in the selection of asset managers, the bank verifies that they have subscribed to the united nations principles for responsible investments and therefore committed to include esg considerations in all their investment decisions. in accordance with such principles, the central bank disinvested from companies involved in the tobacco industry and / or linked to the production of nuclear weapons in 2021, while progressively increasing the share of green, social and sustainable bonds in its internally managed portfolios. in conclusion global warming requires us to rethink thoroughly the way we live, produce and consume. while the responsibility to engineer a coordinated response rests primarily on national governments and international organisations, everyone has a stake in this process. the central bank of malta, and the eurosystem more broadly, intends to contribute to net zero emissions by adjusting its policy framework in favour of low emitters, by enhancing the resilience of the banking system and by incorporating climate change into its macroeconomic models to ensure that the monetary policy stance takes climate into account and that monetary policy measures are transmitted smoothly to the real economy. these efforts will safeguard the public good of stable prices while fostering the transition to the public good of a clean environment