Initiative of the year - green bond: Transition Finance Handbook

Financing the transition to a climate-neutral economy is a crucial role for outcome-targeted sustainable or green finance.

Published on 9 December 2020 by the International Capital Markets Association (ICMA), the Transition Finance Handbook gives important guidance on how issuers can signal their credible transition plans to investors and frame and facilitate their financing needs.

"This work can be a game-changer in further clarifying and solidifying transition finance," commented one Environmental Finance Bond Awards judge.

Esohe Denise Odaro, chair of the Green and Social Bond Principles Executive Committee, said: "With only a decade left to meet the goal of halving greenhouse gas emissions globally, the Climate Transition Finance Handbook is a timely document.

"The Handbook comprises disclosure recommendations to facilitate the necessary flow of capital to issuers required to decarbonise and implement a climate transition strategy on the basis of a science-based alignment with the Paris Agreement."

Members of the ICMA working group which compiled the handbook have previously argued that the development of climate transition finance as a new asset class is necessary to stop the credibility of the green bond market being undermined. They point out that the market struggles to cater for companies operating in greenhouse gas-intensive industries, such as oil and gas.