TRANSITION FINANCE
To achieve the goals of the 2015 Paris Agreement and limit the impacts of climate change, we urgently need to reverse rising greenhouse gas (GHG) levels and help communities and economies to adapt. This will require entities with some of the highest emissions levels to reimagine themselves, planning and implementing transition pathways in a world that has renewed priorities for GHG management and climate resilience.
To achieve the goals of the 2015 Paris Agreement and limit the impacts of climate change, we urgently need to reverse rising greenhouse gas (GHG) levels and help communities and economies to adapt. This will require entities with some of the highest emissions levels to reimagine themselves, planning and implementing transition pathways in a world that has renewed priorities for GHG management and climate resilience.
The transition programme aims to shift the whole economy to align with a 1.5 degree, net zero future:
Climate Bonds Transition Programme was launched in 2020 with support from the Children's Investment Fund Foundation (CIFF) and aims to develop science-based, Paris-Aligned investment eligibility criteria, identify the necessary policy levers to scale up credible finance flows and establish market credibility for transition finance.
The sector focus includes hard-to-abate sectors from energy, heavy industry, transport, and agriculture. Initially focused on the EU, the programme has since expanded to China, India, Japan and Brazil.
Principles and Hallmarks of Transition
Climate Bonds Transition Framework is built on two foundations: 'Transition Principles' presented in Financing Credible Transitions white paper and 'the Hallmarks' consisting of five hallmarks of a credibly transitioning company.
Financing Credible Transitions
Launched in 2020, the groundbreaking white paper presented a framework for identifying credible transitions by introducing 'transition' as a concept, put forward a framework for use of the transition label in practice and propose clearly demarcated roles for both a green and a transition label.
Transition finance for transforming companies
This paper explicitly addresses the challenge of the climate mitigation transition, and specifically, assessing the credibility of a company’s decarbonisation, presenting Climate Bonds’ proposal of Five Hallmarks of a Credibly Transitioning Company.