Transition finance
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Climate change - transition - financing.
Transition finance is finance to enable activities and businesses that are currently large emitters of greenhouse gases, to:
- Reduce their emissions significantly
- In alignment with the Paris Agreement
Transition finance may be available for - and applicable to - initiatives that do not qualify as fully "green", but still have a substantial and important contribution to make in transitioning from "brown" to "light brown" levels of emissions.
Relevant sectors might include fossil-fuel extraction and heavy manufacturing.
- Transition label v Green label
- "Turning to the bond market, the transition label originated to sell bonds that were difficult to market as green bonds...
- In broad terms, we propose that:
- The green label continues to be used for eligible investments in activities or entities that (a) have a long-term role to play [in the future economy] and (b) are either already near zero or are following decarbonisation pathways in line with halving global emissions by 2030 and reaching net zero by 2050.
- The transition label be used for eligible investments that:
- (i) are making a substantial contribution to halving global emissions levels by 2030 and reaching net zero by 2050 but will not have a long term role to play; OR
- (ii) will have a long term role to play, but at present the long term alignment to net zero goals is not certain."
- Financing credible transactions - How to ensure the transition label has impact - Climate Bonds Initiative
See also
- Bond
- Brown
- Climate Bonds Initiative
- Climate change
- Climate transition risk
- Decarbonise
- Emissions
- Finance
- Fossil fuel
- Green
- Green bond
- Greenhouse gas
- Net zero
- Paris Agreement
- Reputational risk
- Stakeholder
- Stranded assets
- Task Force on Climate-related Financial Disclosures
- TCFD Recommendations
- Transition
- Transition Finance Market Review (TFMR)
- Transition risk
- Transition sukuk
- World Economic Forum
