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A Global Call to Action on Transition Finance at COP28

An open letter to financial, government, and corporate leaders

This open letter calling for the increased deployment of transition finance is being released in conjunction with COP28 by RMI on behalf of 11 of the undersigned NGOs. Below, we outline a shared vision for transition finance and call for urgent, mutual action from the financial sector, governments, and issuing entities.

Why transition finance matters

Transitioning the entire global economy in line with goals to limit global warming to 1.5°C will require massive capital investment — estimated at roughly $200 trillion to $275 trillion by 2050. While green finance has gained significant momentum, increasing over a hundred-fold in the past decade, uncertainty and debate still exist around the definition and implementation of “transition finance” to decarbonize high-emitting and/or hard-to-abate sectors.

In this crucial decade, scrutiny over industrial and financing activities is rightly increasing to ensure that net-zero objectives are enabled rather than undermined. We believe that transition finance can, if implemented credibly, deliver high impact transition-enabling solutions for high-emitting counterparties and assets, which may otherwise not be eligible for green finance. However, fear of greenwashing accusations, unclear or insufficient policy and regulatory signals, and pressure to reduce financed and facilitated emissions can delay the deployment of credible, transition-enabling capital to the sectors that need it most.

Furthermore, while the economic case for the transition is growing, high capital costs, technology and offtake risks, and a lack of bankable projects across critical technologies are inhibiting much-needed progress. It is in this context we call for further collaboration and action across financial, policy, and corporate stakeholders to mobilize transition finance in pursuit of a rapid, equitable transition.

A common vision for transition finance

There are several frameworks, taxonomies, and principles on transition finance put forth by GFANZ, ICMA, the OECD, etc., however no singular definition exists. The signatories of this letter agree that transition finance can be characterized as:

  • Enabling decarbonization of high-emitting entities and/or hard-to-abate sectors where a credible pathway to 1.5°C-aligned decarbonization exists. This could include financing transition-enabling climate solutions in high-emitting sectors, managed phaseout, or activities that support alignment with 1.5°C pathways.
  • Predicated on the existence of a credible strategy for the issuer to decarbonize over time, in line with science-based pathways for the sector and region, and with consideration of a just transition. This could be featured in a robust transition plan, or demonstrated through engagement, disclosures, targets, and commitments.
  • Tracked via annual monitoring and evaluation, with regular reporting of transition activities and outcomes from agreed baselines. This could include incentives or penalties if transition milestones and/or KPIs are met or missed.
  • Avoiding carbon lock-in. Consideration should be given to the lifetime of the activities and time horizons to ensure that this is not business-as-usual financing that extends the lifetime of high emission assets, pathways, and technologies beyond scenario time horizons.
A clarion call to action

As signatories, we commit to help overcome persistent barriers to transition finance and offer clearer signals, guidance, and support to ensure credibility and real economy impact.

At the same time, we recognize that the energy transition cannot wait for perfect guidance and data. We call on the financial sector to take urgent action now, to unlock transition finance, and we acknowledge the key role that governments, issuers, and borrowers must play as well.

We call for the financial sector to:
  • Develop supportive internal policies and practices – This could include: providing internal guidelines on transition finance; employee training to develop sectoral and regional expertise; providing transparency on lobbying activities and aligning them with net-zero commitments; and implementing clear governance, measurement, monitoring, and reporting structures.
  • Offer and scale transition finance products and services – This could include: increasing financial offerings to transition high-emitting and/or hard-to-abate activities, companies, and sectors; developing and scaling of transition-linked financial products; and seeking out partnerships to de-risk transition opportunities.
  • Engage clients – This could include: engagement and stewardship approaches to support the transition activities of clients; tracking issuer progress; and ensuring consequences if issuers fall short of expectations.
  • Report transition finance activities – This could include: disclosing transition-enabling financing and commitments, enabling activities, managed phaseout transactions, and transition outcomes as part of climate reporting, separate and additional to financed emissions reporting; sharing case studies of transition finance activities to destigmatize and help de-risk future deals; and supporting development and adoption of decision-useful data and metrics.
  • Support a just transition – This could include: outlining and implementing approaches to ensure a just transition in policies, procedures, lobbying, and client engagement; and mitigating any negative social implications of transition investments and financing activities.
We call for governments to:
  • Create enabling policy frameworks – This could include: developing national transition plans to provide strong structural and regulatory guidance to the private sector; fostering research and development for unproven net-zero technologies in hard-to-abate sectors; reducing regulatory barriers to the deployment of transition-enabling technologies and infrastructure; and implementing enforceable regulation to incentivize and standardize disclosure of transition-relevant data, including through corporate and financial institution transition plans.
  • De-risk and allocate transition finance – This could include: incentivizing the mobilization of high-quality transition finance; issuing transition finance via public finance institutions; supporting project pipeline development; and partnerships to de-risk private investment in hard-to-abate sectors.
  • Support a just transition – This could include: encouraging financial institutions and issuers to mitigate negative social implications of their transition investments; and supporting investment and training in affected communities.
We call for issuers and borrowers to:
  • Express demand for transition finance – This could include: engaging with financial institutions to request capital for transition activities; and exploring innovative financing strategies and contracts to access transition-enabling capital.
  • Develop and publish credible transition plans – This could include: adopting sector and regional best practices for developing, executing, and reporting on a plan to transition activities in alignment with a just, science-based, 1.5°C economy.
  • Gain third-party verification – This could include: validating targets as science-based; and third-party assurance on transition plans, metrics, and reports.
  • Identify and report material transition metrics – This could include: identifying core transition-linked, sector-specific KPIs (e.g., transition-related CapEx, OpEx, and/or offtake) and targets over relevant time horizons; and tracking and transparently reporting progress associated with climate targets and transition plans.
  • Engage stakeholders – This could include: communicating and collaborating with investors, employees, communities, and policymakers throughout the development process and implementation of transition plans to ensure that activities are fair, equitable, and just.

Signatories will be in Dubai during COP28 to discuss how key stakeholders can take positive action to scale transition finance together, beginning with the criteria and calls to action listed above. Measures such as these will help create critical guardrails and activity around transition finance, while reducing the risk of greenwashing and facilitating real economy impact.


Ceres, CDP, Climate Bonds Initiative, Climate Safe Lending Network, Climateworks Centre, Environmental Defense Fund, RMI, ShareAction, Sierra Club, World Benchmarking Alliance, WWF International

This call to action is supported by UK Finance, the collective voice for the banking and finance industry in the UK.