On 7 July 2023, there was published in the Official Journal of the European Union (OJ) Commission Recommendation (EU) 2023/1425 of 27 June 2023 on facilitating finance for the transition to a sustainable economy.

The Recommendation is addressed to:

  • Undertakings that want to contribute to the transition to climate neutrality and environmental sustainability, while enhancing their competitiveness and are seeking finance for investments for this purpose.
  • Financial intermediaries and investors that are willing to provide transition finance to undertakings.
  • Member States and financial supervisory authorities.

Among other things the Recommendation notes that financing the transition to a climate-neutral and sustainable economy is at the core of the European Commission’s Communication of 2021 on a Strategy for Financing the Transition to a Sustainable Economy, which outlines the need for an inclusive approach to sustainable finance regardless of sectors, geographies, actors and the different starting points in the transition.

The Recommendation aims to support market participants that wish to obtain or provide transition finance by offering practical suggestions on how to approach transition finance. In particular, the Recommendation clarifies the concept of transition finance, acknowledging the significant role that market participants can play by voluntarily using tools from the Union sustainable finance framework, as needed for transition finance.