UK review says even polluters should benefit from transition finance

High-polluting businesses should not be stopped from accessing financing aimed at driving the transition to net zero, but they should have "credible" plans for cleaning up their operations, a UK government-backed review said on Thursday.

The Transition Finance Market Review was launched in January to identify financial products and services that banks could offer to help companies transition to a net zero economy by 2050, and will report back by the summer. "Greenwashing concerns have led to suggestions that the scope of transition finance should not cover certain high emitting sectors or organisations," the review said in a call for evidence on Thursday.

"However, transition finance, almost by definition, needs to include high emitting sectors, such as being applied to reduce emissions in a just and equitable manner, including by early retirement of assets." Transition finance should also cover renewable energy infrastructure, which some consider as separate "green" finance, given they all support transitioning to a net zero economy, the call for evidence said.

The review also aims to identify barriers to making Britain a global hub for transition finance products, and what rule changes are needed for this. Its chair, Vanessa Havard-Williams, said last month that she would look at barriers such as banks facing pressure to ditch polluting customers, making it harder for them to transition to net-zero.

The call for evidence cites other blocks such as asset managers facing pressure to divest assets that are not considered "green" reputationally. "We are asking for your thoughts on where the greatest opportunities lie for high integrity, scalable transactions - what current structures, frameworks and approaches offer a good starting point," Havard-Williams said.

"(Also) what additional guardrails you would provide to define credible transition finance, and... what you think needs to change."

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