On 19 September 2023, the Glasgow Financial Alliance for Net Zero (GFANZ) launched a consultation which outlines preliminary considerations regarding defining transition finance and potential for decarbonisation contribution methodologies.

In 2022, GFANZ identified four strategies necessary for financing a whole economy transition to net zero, which collectively comprise ‘transition finance’. These finance or enable the following:

  • Climate solutions – Entities and activities that develop and scale climate solutions.
  • Aligned – Entities that are already aligned to a 1.5 degrees Celsius pathway.
  • Aligning – Entities committed to transitioning in line with 1.5 degrees Celsius-aligned pathways.
  • Managed phaseout – The accelerated managed phaseout of high-emitting physical assets.

The consultation document seeks market feedback on a principles-based approach to segment portfolios by the four key strategies and highlights potential approaches to estimate associated decarbonisation contribution impact, drawing on existing methodologies and concepts.

The principles outlined in this consultation document are designed to be voluntary, pan-sector and globally applicable. They build on previous GFANZ publications, existing practices, transition finance frameworks and potential decarbonisation contribution methodologies.

The deadline for feedback to this consultation is 2 November 2023. The final report will be published by COP28.