Transition Finance Council set to publish new guidelines
The UK's Transition Finance Council is getting ready to publish overarching global guidelines to assess the credibility of companies and groups' transition plans as the architecture to scale up transition finance continues to move into place.
The TFC's entity-level transition finance guidelines aim to increase financing to decarbonise high-emitting firms and will be published on March 26 after wrapping up a global consultation on January 30.
The guidelines are designed to be used across international markets and asset classes for general purpose financing, debt or equity investments or transition-themed funds, and could also be used by banks and financial institutions to assess their own sector targets.
"We are working to create a set of transition guidelines that can be applied across different parts of the market to assess the credibility of a company or group's transition planning and implementation," said Vanessa Havard-Williams, chair of the credibility and integrity working group at the TFC.
"They can be a common thread across credit, private capital, asset owners, asset managers and insurance, as well as being capable of being applied in different geographies and sectors."
The TFC was launched in February 2025 by the UK government and City of London Corporation to build on the work of the UK Transition Finance Market Review, which in October 2024 published an influential set of recommendations on how to scale up a credible transition finance market.
Its focus on strategic entity-level transition plans complements aligned standards on transition finance that were published last October by the three global loan market associations and the International Capital Market Association, both of which focus on project or activity-level transactions.
Raft of deals
Work is underway on a raft of new transition deals that are set to reach the market shortly and are initially expected to be activity-level use-of-proceeds transition loans and bonds, using market guidance led by the Loan Market Association and ICMA's work on climate transition bonds.
However, the TFC's bigger-picture focus on transition plans at an entity level are also suitable for sustainability-linked structures, which saw a heavy drop in volumes in 2025 but are still seen as useful tools to highlight progress in sustainability topics, potentially including sovereign or biodiversity-related issuance.
"The transition loan principles focus more on project activity and can be used in conjunction with the TFC's entity-level work," said Gemma Lawrence-Pardew, head of sustainability at the LMA.
"The TFC is doing some very useful work on contextualisation, which hopefully will align with what is needed outside developed economies. So my hope is that the two will sit nicely together."
The LMA starts work in March to update its transition loan guide and draft principles into fully fledged transition loan principles that are expected to be published this year.
Four principles
The TFC's voluntary market-based guidelines are based on four key principles: credible ambition; action into progress; transparent accountability; and addressing dependencies.
They will align with international standards including the UK's Transition Plan Taskforce Disclosure Framework, the International Sustainability Standards Board, Carbon Disclosure Project and the Net Zero Investment Framework.
The major challenge for the TFC has been how to frame a credible pathway for transition that is sufficiently rigorous and anchored to the Paris Agreement to limit global warming to 2 degrees Celsius or less, while allowing enough flexibility for different sectors and countries to have their own trajectories, something that is particularly important in emerging markets.
In addition, the market is still getting to grips with the first round of corporate transition plans and work on sector decarbonisation pathways continues to develop.
"We are at an early stage in relation to corporate transition planning and implementation," Havard-Williams said.
Corporate transition plans focus on "low hanging fruit", such as efficiency gains and cutting waste, and companies are tending to defer large capex amid an ongoing backlash against sustainability in the US, according to Andrew Coburn, CEO of Risilience, a climate and nature-risk analytics company.
"Corporate readiness for transition is very patchy and very variable from one company to another and obviously there's an ongoing debate around the political dimension of sustainability," he said.