ASFI has lodged its response to the UK Transition Finance Council’s second consultation on entity-level transition finance.

The submission reflects a consistent ASFI position: transition finance is only credible when it is anchored in real-economy change.

While transition finance can play an important role in supporting decarbonisation in emissions-intensive sectors, this depends on clear integrity guardrails that ensure capital is directed toward genuine, time-bound transition pathways and avoids carbon lock-in.

In its submission, ASFI highlights three core considerations:

• Activity-level assessment – understanding an entity’s underlying activities, asset base and capital investment plans is critical to assessing whether it is genuinely transitioning. Capital expenditure provides a forward-looking indicator of transition credibility that complements targets and emissions metrics.

• Capacity to transition – the Guidelines should support investors to distinguish between activities that have a demonstrable capacity to transition and those that are structurally incompatible with a Paris-aligned future.

• System-wide coherence – transition finance frameworks are most effective when aligned with the broader sustainable finance architecture, including climate disclosures, credible transition plans, sectoral pathways, taxonomies and supporting public policy.

The full submission is available for download below.