the growing concern about the effects of climate change, but it may also reflect a lower underlying risk. in any event, this change in attitude by investors should also serve as a catalyst for change towards more sustainable activities. taxonomy i should, however, also mention a general problem that may be holding these markets back. although the establishment of various green principles, such as the gbp, facilitated the launch of the green bond market, the lack of a commonly accepted taxonomy4 could be hampering its subsequent development. a shared taxonomy is essential to be able to make a coherent analysis of the green / brown bond yield spread. it is also important for the supervisor, as it permits aggregate risk and default analysis, consistent stress testing and the development of macroeconomic models, all of which are required to assess medium and long - term effects on the economy. lastly, a common taxonomy is needed to provide clear and consistent information to investors and the general public, as will be required of all listed companies in the future spanish legislation on environmental transition. in this setting, the european commission ’ s action plan, presented in march 2018, is crucial. the plan includes three sustainable finance regulations, including one on the creation of a “ common taxonomy ”. i trust this regulation will be approved shortly, in accordance with the objectives set by the new european commission, and that this taxonomy will finally provide us with a common definition of what may be considered “ environmental ” or “ sustainable ”. the role of supervisors – external initiatives as supervisors, we clearly have responsibility for urging on these changes. we need to be proactive ; in particular, we need to enter into a dialogue with banks to analyse how they are incorporating environmental risk. at the banco de espana we are intent on pressing ahead with this dialogue. let me mention just a few examples of recent steps taken. to assess the level of preparation for environmental risk, we conducted a survey among the 12 banks directly supervised by the ssm and several other smaller banks. subsequently we discussed the survey findings with the participating banks, conveying to them the importance of this issue and the supervisory expectations. according to the survey findings, many banks that were already explicitly considering environmental risk have included it in their social responsibility areas. almost all have a team dedicated exclusively to sustainable finance and some also indicate that they have established specific committees, reporting in some cases to the area general manager or corporate secretary and in others directly to the board of directors. in general, the green bond principles are updated once

of their being regulated activities and having, in many cases, a dominant market position. moreover, to date these companies have not had to assume the cost of the pollution they cause, so in an energy transition scenario their advantage in terms of profit margin could be affected. the banking sector as a facilitator of change in the production model i should like to refer briefly to the second point i mentioned above. as indicated in the 2015 paris agreement, the banking sector has an essential part to play to facilitate change in the production model. indeed this second goal is related to the first, as correctly measuring environmental risk should assist in the transition towards a more sustainable model and would, therefore, be a logical consequence of the first goal. as i have said previously, one essential feature of any viable business model is that banks identify and quantify all the costs and risks involved and pass them through to prices and capital. accordingly, if banks incorporate climate - related risks into costs and capital, they indirectly become “ facilitators ” of change, by reducing the cost of financing of activities that contribute most to the sustainable transformation of the economy, while at the same time discouraging more contaminating activities. the role of investors i also wish to refer to the role that investors should likewise play as facilitators of this transition. interestingly, the emergence of “ green bonds ”, which was not in response to any official initiative, came well before the paris agreement, which could be considered to mark the beginning of the involvement of the banking sector. in fact the history of green bonds began in 2007 with the first issue by the european investment bank. as you know, green bonds must be used to fund projects that are directly linked to sustainability, preservation of the natural environment and transition towards a lowcarbon economy. to achieve the green bond certificate, issues must satisfy certain principles, such as the green bond principles ( gbp ) issued by the icma in 2014, to be verified by external appraisal. in general, green bonds are placed among investors with higher demand and lower costs than equivalent standard issues. the market has been particularly active in recent years, especially since the gbp were published in 2014. at june 2019, green bonds outstanding amounted to an estimated usd630 billion. i believe it is highly significant that this market has developed aside of official initiatives, based entirely on private standards such as the gbp. investor demand for green bond 6 / 9 issues is a clear sign of