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OECD Guidance on Transition Finance

Ensuring Credibility of Corporate Climate Transition Plans

image of OECD Guidance on Transition Finance

This guidance sets out elements of credible corporate climate transition plans, which aim to align with the temperature goal of the Paris Agreement. Such plans are needed to address the growing risk of greenwashing in transition finance and facilitate a global, whole-of-economy climate transition. Based on extensive stakeholder consultations, including an industry survey, the guidance provides market actors, policy makers, and regulators with a comprehensive overview of existing transition finance approaches, identifying the main challenges and solutions. The guidance is relevant to: (i) policy-makers and regulators seeking to develop or revise relevant policy frameworks or regulations; (ii) corporates developing transition plans and seeking to identify the most salient elements of existing initiatives; and (iii) financial market participants planning to provide finance for the implementation of net-zero strategies. The guidance emphasises greater transparency, comparability and granularity in corporate transition plans, and the need for adequate environmental and social safeguards. In light of challenges for some corporates, especially in emerging markets and developing economies, and the risk of excluding key actors from transition finance, the guidance highlights the need for policy-makers to take stronger action to bolster domestic enabling environments for transformative investments.

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Case studies on sustainability-linked instruments of select companies in hard-to-abate industry sectors in EMDEs

In order to shed light on the potential and growth challenges of sustainability-linked financial instruments, this Annex provides case studies on companies that raise sustainability-linked finance for their decarbonisation in hard-to-abate sectors, selected from emerging and developing economies. Illustrative examples include sustainability-linked instruments issued by Indorama Ventures (chemicals, Thailand), CEMEX (cement, Mexico) and JSW (steel, India). Countries were selected to focus on emerging and developing countries, and where possible, to take advantage of contacts through the OECD Clean Energy Finance and Investment Mobilisation (CEFIM) programme. Companies headquartered in these countries were selected based on whether a sustainability-linked financing framework with sufficient detail was put in place in the past 12 months (further background on the companies below).

English

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