INSIGHT by the Climate Bonds Initiative
Climate Bonds Initiative has released a mapping of corporate transition frameworks to demystify the landscape of transition finance frameworks. This is the first step in a wider collaborative effort from Climate Bonds Initiative, Climate Arc, Institutional Investor Group on Climate Change (IIGCC) and Sustainable Markets Initiative, with methodological feedback from Glasgow Financial Alliance for Net Zero (GFANZ) and representatives from the investment world.
This collaborative effort aims to navigate the myriad transition frameworks, drawing out and building on the commonality in those frameworks. As at present, the proliferation of those frameworks is causing confusion in the market.
The project addresses the pressing challenge of navigating through various corporate transition frameworks that have proliferated. The goal is to create a navigator tool that enables financial institutions to orientate their corporate portfolios in a way that is consistent with those frameworks. The intention is to release that tool in January 2024.
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〉Transition and the Enabling Role of Taxonomies and Frameworks | Investor Leadership Network
The comprehensive mapping looks at guidance on credible corporate transition plans and transition categories. It identifies common ground among various transition frameworks. The key findings are:
〉There is a consensus on the core principles for setting authentic targets, devising actionable strategies, and ensuring robust accountability. However, there are some differences in how those principles are interpreted across the frameworks.
〉Corporate transition planning and implementation can be broadly classified into five or six categories, these can be used to assess which corporates can be credibly included in a transition portfolio.
〉All corporates need to move rapidly through these transition categories guided by their transition plan.
〉Financial institutions may choose to prioritise the transition of corporates in hard to abate sectors in the near term.
This project will also assist in creating a common language for financial institutions facilitating the decarbonisation of high-emission assets through proactive engagement, while simultaneously safeguarding against greenwashing and the pitfalls of divestment.
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