This discussion paper seeks to advance the concept of transition finance as a channel for systemic decarbonization of the global economy.
We offer an updated definition of transition finance, review estimates of investment flows directed towards low-carbon activities, and highlight metrics that could be adopted by banks, asset managers, and other financial institutions to ensure integrity.
Transition finance has the potential to facilitate real changes in the global economy but needs a set of mandatory standards that underpin tangible contributions towards a future energy system. As capital providers examine their options for accelerating progress on climate change mitigation, we highlight the crucial role of transparent criteria in managing continued funding to fossil-fuel producers and energy-intensive firms.