Transition Finance

What is Transition Finance

Transition finance refers to capital investments that support high-emitting companies and sectors in reducing their greenhouse gas emissions in line with scientifically grounded pathways. Rather than focusing only on already “green” companies, transition finance enables real-world decarbonization by funding credible, measurable progress toward net zero.

This includes financing companies in sectors like energy, transport, manufacturing, and real estate that are essential to the global economy — but need to transform significantly to align with climate goals.

Why Transition Finance

To meet global net zero goals, emissions need to be cut across all sectors — not just those already considered green. Today, so-called hard-to-abate sectors — including heavy industry, transport, power generation, and real estate — are responsible for over 70% of global greenhouse gas emissions.

At the same time, the case for transition finance isn’t only environmental — it’s economic. Companies with credible and science-aligned transition plans are demonstrating greater resilience and competitiveness. They are reducing energy costs through improved efficiency, gaining access to new markets and customers, and increasingly attracting long-term capital from sustainability-conscious investors. These businesses are also better positioned to weather regulatory shifts, adapt to tightening climate policies, and avoid reputational risks tied to emissions exposure. In this context, transition finance is not just about risk mitigation — it's about financing a more stable, forward-looking economy.

Our approach to Transition Finance

Interdisciplinary Team

The transition to net zero is complex — and demands expertise from multiple fields. That’s why we’ve built a cross-functional team combining:

• Climate impact specialists who assess sectoral decarbonization pathways

• Impact and ESG experts who validate data integrity and sustainability claims

• Investment professionals who understand credit risk, portfolio design, and fixed income markets.

Climate Transition Scoring Methodology

Together, we’ve developed a proprietary Climate Transition Scoring (CTS) methodology: a rigorous, science-based framework used to evaluate the decarbonization potential of corporate bond issuers across five dimensions.

This scoring methodology is both data-driven and expert-led, drawing on over 150 quantitative indicators from sources like CDP and the Science Based Targets initiative (SBTi), and refined through qualitative review by our climate impact specialists. Analysts validate and contextualize each score to account for data gaps, outliers, or overlooked trends, ensuring a comprehensive and credible evaluation of each issuer’s climate transition pathway.

Engagement

Our commitment to impact doesn’t stop with portfolio construction. Engagement is central to how we drive change. We regularly participate in collective initiatives such as CDP’s Non-Disclosure Campaign to improve environmental transparency across markets. In parallel, we engage directly with portfolio companies to clarify decarbonization strategies, address gaps in emissions reporting, and encourage stronger, science-based target setting. By maintaining an active dialogue and clearly communicating our expectations, we aim to help issuers progress faster and more credibly on their path to net zero.