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[2022-November-15] WG3: Transition Finance: Emerging Trends and Practices

On November 15, 2022, the GIP Working Group on Green Financial Product Innovation (WG3)  held a webinar titled "Transition Finance: Emerging Trends and Practices". The webinar invited experts from various backgrounds to express their views and engage in discussions on transition finance.

In his welcome speech, Dr. MA Jun, Chairman of China Green Finance Committee and Co-chair of the GIP Steering Committee, shared the discussions and progress on transition finance by the G20 Sustainable Finance Working Group. He underlined the five pillars for transition finance, including identification of transition activities, information disclosure, financial instruments, incentive mechanisms, and just transition.

LIU Xiaowei, the Asia Director of Special Projects at the World Energy Council, presented the findings of a survey conducted among global energy leaders from different industries. The survey revealed that energy security has emerged as a common concern worldwide. However, there are differing viewpoints regarding the approach and strategies for energy transition, as well as the expected roles in this process. Xiaowei emphasized that energy transition is a systematic and diversified process that necessitates careful consideration of its potential impacts, particularly the "trilemma" of energy security, environmental sustainability, and energy affordability.

Spencer LIU, Associate Partner at McKinsey & Company, introduced the scenario analyses conducted by McKinsey on global energy transition and shared the key conclusions under the scenario of “Further Acceleration”--a more aggressive policy scenario. These included a shift in the global energy mix towards greater reliance on electricity, rapid development of renewable energy, further reduction in demand for oil and gas, and the potential adoption of decarbonization technologies supported by policies and investments across various sectors. Spencer emphasized the importance for financial institutions to proactively plan for decarbonizing their portfolios, carefully consider the areas of investment and the associated climate impact, and raise awareness among stakeholders about the concepts and actions related to energy transition.

CHEN Yingying, Director of Transition Finance at Standard Chartered Bank, presented the bank's practices in transition finance. The bank launched a transition finance framework in 2021 to identify qualifying assets while attempting to avoid significant harm to other environmental and social objectives. Yingying acknowledged that transition finance encounters certain practical challenges, such as companies grappling with understanding climate transition risks, navigating the transition process, and accessing diverse low-carbon transition technologies. She shared a case of a transition finance syndicated loan facility provided by Standard Chartered Bank to Yinson Holdings Group and pointed out that having a clear transition roadmap and in-class technology can bolster market confidence in transition financing.

During the panel discussion session, Jennifer ZHOU, Head of Sustainable Finance China at Standard Chartered Bank, WANG Na, Senior Manager at the Investment Banking and Asset Management Department of Bank of China, and Amal BENAISSA, Head of Sustainable Finance at Bank of Africa, shared the efforts made by their respective banks in the field of transition finance. These efforts included participating in voluntary carbon markets, establishing transition teams to assist clients in developing transition roadmaps, issuing sustainability-linked bonds, and exploring localized transition finance solutions.

    Room 1604-1607,Building No.3, World Overseas Chinese Business Center, Tongzhou District,Beijing,101100,China
    6006 Moor Place, 1 Fore Street Avenue, London, EC2Y 9DT, UK
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