The importance of scaling green or climate investment across economic sectors cannot be understated; however, this type of finance does not capture all activities that are key to the global transition. Recognizing the importance of transition finance is therefore key, as it supports a shift toward low-carbon pathways and a phasing out of high-emission activities in hard-to-abate sectors. This is particularly important for the power sector, where the provision of fossil fuel subsidies continues to create barriers for investment in low-carbon energy.

Without a financing mechanism to support such shifts, the transition of key sectors could be disrupted. Understanding current transition finance flows is therefore critical, yet the lack of a universally agreed-upon framework or a clear definition that applies to the activity or project level continues to pose a major challenge.

Building on Climate Policy Initiative’s (CPI) expertise in tracking project-level investment as part of the Net Zero Finance Tracker (NZFT), this report aims to encourage stronger reporting practices among financial institutions and highlight metrics that can help them achieve a meaningful impact in the real economy.

This approach will, over time, be scaled across other sectors, supporting CPI’s broader mission to develop robust, evidence-based approaches for tracking and accelerating the transition to a low-carbon economy. 

For a deep dive into the innovative activity-level metrics that offer a precise view of financial alignment, read the full report.

Read the report

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