Financing the transition: Consultation on entity-level Transition Finance Guidelines

The Transition Finance Council, jointly established by the City of London Corporation and HM Government, is currently seeking feedback on its draft entity-level Transition Finance Guidelines (Guidelines). 

These Guidelines aim to facilitate the flow of capital towards entities that are credibly transitioning to net zero, across various asset classes and global jurisdictions. They offer a practical approach for evaluating the credibility of a company’s decarbonisation strategy. This includes assessing governance structures, capital allocation decisions, operational changes, and alignment with sector-specific transition pathways.

Transition finance is essential to achieving a net zero global economy. While investment in established green sectors is accelerating, many carbon-intensive industries such as heavy manufacturing, transport, and agriculture require significant funding to decarbonise. Sector-specific policy support is vital to unlock investable opportunities, but investors also need reliable tools to evaluate whether companies are genuinely transitioning in a financially sustainable way. Currently, there is no consistent, cross-asset framework for identifying and assessing credible transition strategies at the entity level - a gap the Guidelines aim to fill. 

Key features of the Guidelines:

1. Entity-level focus: The Guidelines support financing for companies undertaking whole-of-business transitions to net zero, not just isolated green projects - with emphasis on governance, strategy, and capital allocation.
2. Credibility framework: They provide a structured approach to assess the credibility of transition plans, including alignment with sectoral pathways and climate goals, helping avoid greenwashing.
3. Flexibility and scalability: Designed to be applicable across asset classes, geographies, and company sizes, including SMEs and firms in emerging markets.
4. Integration with financial decision-making: The Guidelines aim to embed transition planning into core financial activities such as capital issuance, reporting, and investment strategy.
   Read the draft Guidelines and respond to the consultation here. The consultation period closes at 12pm on 19 September 2025.

Read the draft Guidelines and respond to the consultation. The consultation period closes at 12pm on 19 September 2025.