Submission to the UK Transition Finance Council’s consultation on entity-level Transition Finance Guidelines

The Australian Sustainable Finance Institute (ASFI) has lodged its submission to the UK Transition Finance Council’s consultation on draft entity-level Transition Finance Guidelines.

ASFI supports the four guiding Principles set out in the draft Guidelines — Credible Ambition, Action into Progress, Transparent Accountability, and Addressing Dependencies — and highlights their importance for strengthening transition planning frameworks internationally.

Clear and science-based rules are essential to direct finance into activities that genuinely support decarbonisation and avoid the lock-in of high-emitting assets.

In our submission, ASFI makes the following key recommendations:

• Paris-aligned safeguards – regional taxonomies and national pathways should only be recognised where they are fully compatible with the Paris Agreement, and that NDCs should not be used as a benchmark as they reflect national commitments rather than science-based pathways (pp.4-5).

• CapEx alignment – taxonomy-aligned capital expenditure should be used as a consistent, comparable benchmark of transition credibility, providing a forward-looking measure of an entity’s decarbonisation pathway (pp.2–3).

• Capacity to transition –the Guidelines should explicitly incorporate, as part of the Credibility Principle, an assessment of whether an entity or sector has the structural potential to decarbonise based on credible Paris-aligned pathways (pp.6–7,10).

• Streamlined usability – universal factors should be referred to as “indicators of performance” and contextual factors incorporated within the four Principles to improve clarity and usability (pp.5–6, 12).

By embedding these considerations, the Guidelines can provide investors and lenders with the confidence to allocate capital to credible transition pathways, helping to mobilise finance at scale towards global net zero.

The full submission is available for download below.