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

External link