According to the report of the G20 Working Group, transition finance refers to "financial services supporting the whole-of-economy transition, in the context of the Sustainable Development Goals (SDGs), towards lower and net-zero emissions and climate resilience, in a way aligned with the goals of the Paris Agreement." In response to the ever-increasing challenges posed by climate change, the development of global transition finance is speeding up.
On August 6, 2023, China Finance 40 Forum held the 413th biweekly roundtable to review the research project on the development of China’s transition finance.
The discussion focused on the pricing mechanism and just transition, among other topics. Experts believed that the development of transition finance is not in conflict with the use of price incentives. Globally, much of the controversy over transition finance is related to the excessive concern of “greenwashing”, which is mainly due to a lack of understanding of the price mechanism.
Some experts held that just transition is the best market-based method to balance the interests of the winners and losers. Some pointed out that attention should also be paid to justice at the macro level.
To realize the goal of net-zero emissions and promote the development of transition finance, experts put forward the following suggestions: first, strike a balance between the dynamic annual targets of net-zero emissions and reasonable GDP growth; second, set priorities and simplify rules to enable more participants to contribute to the transition towards net zero; third, tackle bottlenecks in standard-setting, identification of rights and responsibilities, carbon market development, rule of law and information disclosure.
