The net zero transition is the structural shift of economies and financial portfolios toward balancing residual greenhouse-gas emissions with removals, in line with limiting global warming. It mobilises capital toward low-carbon technologies, retires or retrofits high-emitting assets, and aligns corporate strategy and disclosure with decarbonisation pathways. Transition finance provides the funding and instruments that allow hard-to-abate sectors to decarbonise credibly over time.
Overview
- The net zero transition reorients investment, policy, and corporate strategy toward a low-carbon economy. It requires redirecting capital flows away from emissions-intensive assets and into clean energy, efficiency, and removals, while managing the risks of stranded assets. Transition finance and credible, science-based pathways are central to making the shift orderly and just.
Key aspects
- Alignment of portfolios and corporate strategy with science-based pathways
- Mobilisation of capital toward renewable energy and efficiency
- Management of transition and stranded-asset risk in high-emitting sectors
- Use of carbon markets and removals to address residual emissions
- Disclosure and reporting frameworks that track decarbonisation progress
Applications
- Aligning investment portfolios with net zero commitments
- Financing decarbonisation of hard-to-abate industrial sectors
- Funding renewable energy and grid infrastructure deployment
- Structuring transition-linked bonds and sustainability instruments