. the transition plans of financial intermediaries ( banks and institutional investors ) can represent a powerful tool both for managing climate risks and for steering the economy on a sustainable path. however, we are moving our first steps in this area. in what follows i will discuss two issues and draw some conclusions. 2. current vs expected emissions an intermediary can implement a net zero transition plan in many ways. to simplify, consider two opposite alternatives. the first would entail changing the composition of its portfolio by moving from high to low carbon intensity sectors / firms, identified based on their current emissions. this is the so - called “ exclusion ” strategy, according to the usual taxonomy of sustainable investment. 4 the second ( the so - called “ best - inclass ” strategy ) would entail overweighting firms that, despite being carbon intensive, have committed to an ambitious and credible decarbonization plan over the coming decades. the first approach, if applied on a vast scale, would suffer from a fallacy of composition : it would be feasible for the individual intermediary, but not at the aggregate level, short of a “ miracle ” in the form of a technological breakthrough allowing carbon intensive firms to transition without financial support, or a quick and radical change in households consumption patterns that causes a fall in demand for high carbon products and services. the second approach avoids this problem and appears capable of providing carbon intensive firms the finance they need to implement their transition plans. figure 1 reports data for eu listed non - financial companies, aggregated by sector. for each sector, the horizontal axis measures the current carbon intensity ; the vertical axis reports the expected decline in carbon intensity over the next decade, as envisioned in each firms ’ published commitments. the figure shows that firms in the more carbon intensive sectors plan to reduce their emissions relatively more aggressively. this suggests that these firms, arguably the most exposed to transition risk, will need substantial flows of finance in the coming years for their transition plans to succeed. the figure also highlights that financial firms could face a difficult choice : in the short - to - medium term financing the transition might even entail an increase in the carbon footprint of their portfolios. while this might seem at odds with a net zero pledge, it could be worth doing. consider e. g. firms operating in the business of power generation, often characterized by very high emissions. their investment choices will global sustainable investment alliance ( 2021 ), “ global sustainable investment review ”. be key to

quarter of 2003. in industry, following the moderate expansion recorded between 2000 and 2002, employment began to contract again in line with production. the unemployment rate fell in 2004, mainly owing to the decline in labour force participation. the diminution in the supply of labour interrupted the decade - long process of convergence towards the average european participation rate. there was a decline in labour force participation by young people in the south, especially women. more systematic action, including training programmes, is needed to raise labour market participation rates. bank lending was 6. 7 per cent greater in december than a year earlier. there was a slowdown in the north and centre, while the growth in lending accelerated further in the south to 10. 5 per cent. credit to consumer households, essentially for the purchase of houses, increased by 16 per cent. the value of new bad loans remained limited. qualitative and quantitative indicators show that credit supply conditions continue to be easy. interest rates are still extremely low. secondary market yields on italian corporate eurobonds are in line with those on the bonds of other international issuers. 5. the banking system and the corporate sector since the early 1990s the italian banking system has undergone a transformation on an historic scale. initially, 68 per cent of total assets were held by banks controlled by the state or by foundations ; today the figure is close to 10 per cent. most of the banking groups are controlled by a core group of investors comprising intermediaries, foundations and, in some cases, firms with minority interests. important international financial intermediaries are present in a higher proportion than in other european banking systems. foreign banks and financial institutions currently hold an average of 17 per cent of the capital of the four largest banking groups ; for the 10 largest groups, the share held by foreign intermediaries is 11 per cent. on the basis of bankscope data, foreign intermediaries hold 7 per cent of the capital of the four leading banking groups in germany, 3 per cent in france and 2. 6 per cent in spain. in the privatization process, foundations ’ and public entities ’ sales of shareholdings were facilitated in the second half of the 1990s by buoyant share prices. in disposing of their holdings in banks, the foundations and public entities fostered the creation of stable core groups of controlling shareholders. mergers and acquisitions have resulted in the number of banks operating in italy falling from 970 in the mid - 1990s to 785 ; 443 are mutual banks.