d'italia ( it ), census bureau ( us ) and ine ( es ). covid - 19 is a unique opportunity to break this vicious circle. the crisis will require a massive reallocation of capital and labour across sectors and economies. it has the potential to unleash unprecedented forces of schumpeterian creative destruction that can help accelerate the adoption and diffusion of green and sustainable technologies across large parts of the economy. policymakers need to allow, facilitate and support this process. but the scope for policy mistakes has increased measurably as the crisis has forced governments to expand their role in economic activity. there can be no doubt that a forceful fiscal response to the crisis was both necessary and adequate. nevertheless, there is a risk that some of the measures – if kept in place for too long – may delay the necessary structural adjustments. even before the pandemic, some carbon - intensive sectors had been facing strong secular headwinds in the wake of changing consumer preferences. the second reason is that the crisis will cause a significant increase in the public and private debt burden. issuance of public and corporate bonds is reaching record levels. in a low - interest - rate environment, the increase in leverage carries a lower cost than in the past. but the best way to avoid the risk of growing debt becoming a long - lasting burden for society is to lift potential growth today and shift the economy on a higher and more sustainable growth path. there are few other areas with a comparable growth potential as green technologies. these are the reasons why the eu innovation fund and the eu recovery fund ’ s focus on the green transition are so important. if flanked by national measures that improve the overall business environment, they will be major policy levers for transforming the european economy more fundamentally and overcoming short - termism in investment behaviour that ignores climate - related risks. greening financial markets the third pillar needed to accelerate the transition towards a low - carbon economy relates to financial markets. the large increase in required bond issuance in response to the pandemic offers the opportunity to deepen the green financial market. green bond issuance has steadily increased in recent years, with a strong focus on the euro area and on public agencies and financial institutions ( see figure 4 ). figure 4 green bond issuance by currency of denomination sources : bloomberg and ecb calculations. last observation : 15 july 2020 green bond outstanding amounts by issuer type sources : bloomberg and ecb calculations. last observation : 15 july 2020

the scale to one side or the other and act as a catalyst for promoting the provision of financial services more broadly throughout the euro area. second, faster progress is needed on disclosure and standardisation. for markets to better support the greening of the economy, and to mitigate risks to financial stability, asset prices need to correctly reflect the externalities associated with climate change. at the current juncture, however, financial markets are suffering from various market failures. uncertainty about what actually qualifies as green activity is one of them. common and clear definitions are a fundamental building block for facilitating the market pricing of environmental risks. the adoption in mid - june of the european commission ’ s taxonomy regulation was an important step in establishing a classification system for sustainable economic activities. but three words of caution are in order. first, the framework is expected to become fully operational only after the adoption of its delegated acts in 2021 and 2022 and so will provide limited guidance at a time when issuance needs are reaching historical levels. during this period, we need to find a way to mitigate the risks of “ greenwashing ” so as to channel funds to where they are most effective. second, a green taxonomy needs to be complemented by a taxonomy for environmentally harmful activities so that investors can identify transition risks more easily and hence also price risk differentials more effectively. and third, the taxonomy requires granular data for it to be useable. in the absence of corporate - level information, the taxonomy cannot be put into use and many metrics will prove useless. this is clearly visible when looking at environmental ratings for financial products : if available, they are often inconsistent, incomparable and at times unreliable – in many cases reflecting the absence of granular data or the large discretion in the construction of such indicators. indicators from different sources often display a very low correlation ( see figure 8 ). figure 8 financial market pricing of climate risk : correlations of bank environmental scores by bloomberg and refinitiv source : ecb financial stability review, november 2019 based on bloomberg, refinitiv eikon, s & p global market intelligence and dealogic. notes : the bloomberg and refinitiv environmental scores give values between 0 and 100, whereby a higher value indicates a better performance in terms of environmental variables. the full unbalanced sample consists of 49 banks and 23 insurers in the eu and the united states. disclosure of climate - related information should therefore become mandatory and more standardised under