Sustainable debt instruments play an increasingly important role in scaling up financing of private investment for the low carbon transition and the other ambitious environmental and social goals set at the EU and global level. Having already emerged as the star of climate finance, green bonds are becoming increasingly popular as companies need to fund operations that are more environmentally friendly in the context of a sustainable recovery from the coronavirus crisis. After an overview of the literature on this new asset class, the paper highlights that reporting on the use of proceeds is considered a crucial element for the success of green bond markets, as it provides investors with an unprecedented degree of transparency. Finally, the paper provides some evidence on the Italian green bond market in the European context.
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