Transition Finance Council publishes draft Voluntary Transition Finance Guidelines

The Transition Finance Council (TFC) has published its draft Voluntary Transition Finance Guidelines to unlock finance to decarbonise high-emitting sectors of the UK economy.

Led by Lord Alok Sharma, The Transition Finance Council (TFC) was co-launched by the City of London Corporation and the UK Government in February 2025. It brings together over 80 senior leaders from finance, industry, policy, and civil society. The Council’s aim is to leverage the UK’s existing strengths to become a global leader in raising transition capital, investment, and expertise in support of UK and global net zero ambitions.

The publication of the draft Voluntary Transition Finance Guidelines follows an international consultation conducted over winter, the findings of which have helped shape the guidance. A variety of asset managers, asset owners and credit institutions including Carlyle, NatWest, Standard Chartered, Santander, Barclays, Ninety One, Columbia Threadneedle, and Lloyds Banking Group have supported in testing the Guidelines, either by assessing them against their own approach to transition finance or by applying them to real company examples. This testing helped note consistencies and areas of difficulty, improving practical usability. The key objectives of the Guidelines are to:

• support capital providers by defining expectations for credible Paris compatible transition planning and delivery, helping reduce greenwashing and transition risk;

• serve as an external reference point for designing transition themed products or funds; 

• support qualification of unlabelled general equity and debt finance as entity-level transition finance; and

• clarify for companies the expected areas of focus of capital providers.

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Lord Alok Sharma, Chair of the Transition Finance Council, said:

“The Transition Finance Council has undertaken a significant level of engagement with domestic and international financial institutions in developing these draft guidelines, and this engagement will continue in 2026. It is pleasing to see that banks and asset owners and managers have already started testing the guidelines to inform their usability and practical application and the intention is that these guidelines become an industry reference point."[i]

Over the course of the next 12 months, one of the council’s main objectives will be to encourage financial institutions to use the Guidelines as an input in advancing their own transition finance frameworks and to feed back remaining areas for improvement or simplification. The TFC acknowledges that given the rapidly evolving expectations around the climate transition, the Guidelines cannot exist as a static document. As such TFC intends to continue efforts on road testing and to develop further assessment examples during this pilot phase. Learnings from the pilot will then be incorporated into a future finalised publication.

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Commenting on the scheme, Hannah Simons, Lloyds Corporate & Institutional Head of Sustainable & Transition Finance, said:

“There are clear benefits of robust, interoperable guidelines for transition finance. By basing decisions on clear, consistent evidence, capital can be directed at activity that makes the biggest decarbonisation impact. Crucially, these Guidelines provide businesses with a simple framework to aid their planning and with a better opportunity to capture the benefits of transition.”[ii]

Looking further ahead, the TFC hopes to expand its international outreach with the aim of increasing alignment on the approach to transition finance across the globe

References

[i] Transition Finance guidelines

[ii] Transition Finance Council: Year-end Progress Report

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