Why Transition Finance Is Critical To Decarbonising The Global Economy

Caroline Haas, Head of Sustainable Finance Advisory at NatWest, explains why transition finance plays a critical role in supporting decarbonisation across the global economy. While green finance focuses on activities that already deliver positive environmental outcomes, transition finance targets high-emitting sectors that must evolve to meet climate goals. Moving these industries along credible decarbonisation pathways is essential to achieving system-wide change.

Haas highlights that credible transition plans are central to attracting capital, requiring clear ambitions, measurable interim targets, and strong governance accountability. She also emphasises the importance of globally aligned frameworks, better climate data, and collaboration across financial institutions, governments, and investors. Despite perceptions that sustainable finance has slowed, investment in the energy transition continues to grow, signalling increasing momentum across markets.