Transition finance offers transparency but risks muddying the water of responsible finance

ICMA’s climate transition framework sets out the base-level guidance on transition strategies, disclosure and assurancesWithout sector-specific guidance and taxonomies linking specific types of transition strategies to science-based targets, the sector will remain opaqueFinancial institutions offering or receiving transition finance need clear strategies to avoid enabling greenwashing, which presents reputational risk as climate rises on the global agenda

ICMA has released its “Climate Transition Framework Handbook” for issuers considering transition bond issuance. These types of issuers are generally excluded from green bond issuance as high greenhouse gas-emitting companies. They include fossil fuel companies and other heavy emitters, although no specific se...