Singapore’s central bank has become among the first in the world to define what counts as “transition” investments with its recently launched sustainable finance classification system, or taxonomy.
Unlike green finance, where funds are used by projects already considered “green”, transition finance is intended to help more carbon-intensive sectors become greener over time.
There is growing international consensus that financing transition activities, beyond green activities, should be high on the agenda for emerging markets that are still highly dependent on high-emitting sectors and relatively young coal fleets.
However, a lack of uniform standards has impeded financing flows towards transition-labelled investments, which remains a trickle in the global sustainable debt market, compared to green and…
